Summary of Proceedings - Western Hemisphere Trade & Commerce Forum (1995)

Summary ofProceedings WestemHemisphere Trade& Commerce Forum Denver,Colorado

July1-2,1995

U.S . DEPARTMENT OFCOMMERCE

Summaryof Proceedings Western Hemisphere Trade & Commerce Forum Denver, Colorado July 1-2, 1995

Published by U.S. DEPARTMENT OF COMMERCE International Trade Administration September 1995

THE

WHITE

HOUSE

WASHINGTON

September

14,

1995

In December 1994 the leaders of the Western Hemisphere came together in Miami to seize an historic opportunity.

We joined together to build a community of nations committed to the values of liberty and the promise of prosperity.

The many achievements of the Summit of the Americas included agreement on principles to help open new markets and to create a free trade area throughout our hemisphere.

The June 1995 Western Hemisphere Trade and Commerce Forum advanced the vision of the Summit by bringing together the best of the hemisphere's business, academic and government leaders.

These men and women from throughout the region identified challenges to improve commercial ties and discussed ways to overcome those hurdles.

They endorsed the free trade goals set forth at the Summit of the Americas and committed themselves to the hard work necessary to achieve success.

I applaud Secretary of Commerce Ronald H. Brown and United States Trade Representative Ambassador Michael Kantor for their achievement in organizing this dynamic event.

The Western Hemisphere Trade and Commerce Forum represents a significant step toward making our region's marketplace more vibrant and open.

It moves us closer to the day when our regional partnership will make freedom, opportunity and prosperity the common property of all the people of the Americas.

Santafe de Bogota. D.C .

August 9, 1995

Dear Businessmen

of the America s:

took An unprecedented encounter of hemisph eric bu s inessmen place at the Trade and Comm erce Forum held in Denver Culorado July 1-2, 1995 . Over 1000 entrepreneur s belon g in g to multiple cultural settings from Ala ska to Tierra del Fuego gather ed to s peak a common language: that of private initiative and com merceia I integration.

Their discussions and recommendation s, as cont ained in the reports released by the United Stat es Departm ent of C omm erce . constitute a unique legacy in the proce ss of buildin g a F ree Tra d e Area of the Americas (FTAA).

The partnership between the private se ctor s of th e Am e1 icas , and between them and their government s, mu st be viewe d as a n ongoing process which should be con stantly nurtur ed , if we want to ensure that everyone will profit from economi c int eg rati o n . Our business communities throughout th e Hemi sph er e play a pi vo l al role in fostering economic growth and socia] welfare and thei r contribution to free trade talks is undi sput ed. W itn ess, fo r example , the active participation of the Canadian/Mexican a n/U S . pri private sectors in the NAFTA ne g oti a tions , or th a t of th e Colombian/Mexican/Venezuelan bu sin ess m e n in the rece ntiy conclude G-3 agreement. The con stru ction of a FTAA, as envisioned in the Miami Summit Declaration , should foll ow th is sa me path .

My country is deeply honored by th e un animou s desig nat i e n in Denver to act as the host of the next Hemi sph eric Tr ade Min is te rial , which will take place in Cartagena , in March , 1996. Whil e we ex p ec t our ministers to agree there on furth er step s to achi eve co mm ercial integration, such an effort would be lame without a parall e l mee ti ng of businessmen.

This is why Colombia wilJ simultaneously ho st a Trade and Commerce Forum , which will enabl e ent re pr eneu rs fr om throughout the Hemisphere both to interact with th eir count e rp a rts on a common stage, and to assi st our government s by expressing their authorized views on issues which are crucial to th e i nteg ratio11

arrangements are now under way . and process. The organizational early to announce an a ge nd a . we do even though it is still too which will addre ss all areas of anticipate a comprehensive forum interest to the private sector.

Colombia is particu_larly suited to be center point of this business forum. Geographically , our country is located half-way between the northern top and the southern end of the Hemisphire. our business culture is founded on the principles of private initiativ e and free enterprises , which have structured over the year " an ex tr emely c ommun i ty. on ambitious and open-minded local ent1路eprcneurial the economic front, Colombia is well known i internationally11 for its sound macroeconomic management , and our liberaliz ation program has paved the way for sustained economic growth , financial stability and investors confidence. We would like to pr esent these as our credentials to host the 1996 Trade and Commerc e Forum.

In my condition as President of Colombia, and acting a lso as the spokesman for the Colombian private sector, I would lik e to ex tend to you our most cordial invitation to attend the 1996 Forum. The businessmen of the Americas must join their governrnent.; in pursuing integra _tion, free competition and democratic valu es in the Hemisphere. It 1s through this longstanding partner ship th at we will be able to ensure well-being for our workers , our am1路1路ies and our c 11 ren. o please reserve a space in your agendas for March 1996, and receive our advanced Commerce Fo1路um we come to Co101nbia ' s Trade and , Cartagena/96.

Sincerely,

THE SECRETARY OF COMMERCE Washington. D.C. 20230

Dear Hemispheric Forum Participant: By all accounts, the Western Hemisphere Trade and Commerce Forum was a great success with over 1,100 participants including ministers, private sector leaders, and press from 34 countries in the hemisphere in attendance. Its success was due to the active participation of all delegations and the constructive exchange among governments and businesses hemisphere-wide .

So that the outcomes of the Forum may be widely understood -- and acted upon we have prepared the WesternHemisphere Tradeand CommerceForum: A Summary of Proceedings, 1995. I hope you find it useful and that you will refer to it often as we seek to form the largest free trade area in the world .

I was particularly impressed by the breadth and depth of the discussions and the recommendations which flowed from them . Traditionally governments have acted -- both unilaterally and in concert with one another -- to shape the international trading system without consulting the people who best understand international trade . July's Denver Forum generated an important precedent for including the private sector at the beginning of the process of hemispheric integration and building the Free Trade Area of the Americas, and these discussions and recommendations will help guide our governments from the outset.

As I noted in Denver, governments acting alone simply are not as effective in promoting free trade as governments acting in partnership with the private sector. The private sector has been leading the process of hemispheric commercial integration for many years . With this conference we have begun to harness our collective knowledge and experience in the service of free trade throughout the hemisphere. I believe the processes we have set in motion will have profound and beneficial effects for many years to come . (An addendum in the Summary notes the suggestion made in Denver that private sector leaders in the hemisphere replicate the Forum at the national level.) With the solid support of the private sector , hemispheric governments can meet the schedule for concluding the negotiation of the Free Trade Area of the Amer icas by 2005 .

I encourage you to read carefully the ideas contained in the Summary. Your thoughtful reflections on this year's forum can be an important contribution to the discussion at the next Forum in Cartagena de Indias, Colombia and the Forum in 1997 which Brazil has offered to host in Belo Horizonte. Your active participation will make it all the more successful.

Sincerely ,

Ronald H . Brown

Acknowledgements

The Department of Commerce wishes to thank the following individuals for their efforts in producing the Summary of Proceedings, 1995:

Th.eWorkshop • Coordinators Information Infrastructure Energy Transportation Agribusiness Tourism Health Technology Environment Standards Legal Systems Small/Medium Sized Business Information Marketplace Private Sector Financing Workforce

Helen Shaw, National Telecommunications and Information Agency Catherine Vial, International Trade Administration C. William Johnson, International Trade Administration Hayden Boyd, International Trade Administration Wanda Barquin, U.S.Travel and Tourism Administration Vicki Kader, International Trade Administration Kristine Bretl, International Trade Administration Christopher Lion, International Trade Administration Ursula Odiaga Iannone, Office of General Counsel Ellen Lenny, International Trade Administration John Siegmund, International Trade Administration Pompiliu Verzariu, International Trade Administration Jorge Perez Lopez, U.S. Department of Labor

The Department also appreciates the efforts of Jennifer Brown and Scott Logan, interns in the International Trade Administration's Office of Inter-American Affairs for their assistance in the preparation of this volume .

IX

Table of Contents Executive Summary

xiii

Sectoral Recommendations

1

Telecommunications Sector Energy Sector Transportation Sector Agribusiness Sector Tourism Sector Health Care Sector Environment Sector

3 4

• • • • • •

5 6 8

10 10

Workshop Summaries and Recommendations • •

• •

• • • • •

• • • •

Building a Foundation for a Hemispheric Information Infrastructure Meeting the Energy Needs of the Americas Transportation: Moving the Hemisphere Together Agribusiness in the Free Trade Area of the Americas Tourism: Expanding Commercial Horizons Improving the Hemisphere's Health through Open Markets Environment and the Economics of Integration Hemispheric Commerce: Setting the Standards of Integration Enhancing Integration through Legal Systems SmaU and Medium Sized Businesses in a Hemispheric Marketplace Towards a Hemispheric Information Marketplace Private Sector Financing: Infrastructure and Privatization Preparing our Workforce for the Age of Commercial Integration and Hemispheric Free Trade

Plenary Remarks •

•

13 15 23

28 33 39 45 52 61

65 69

75 81 85

89

Opening Remarks Hon. Ronald H. Brown, U.S. Secretary of Commerce Hon. Federico Peña, U.S. Secretary of Transportation Ambassador Michael Kantor, U.S. Trade Representative Luncheon Address Hon. Thomas McClarty, Counselor to the President of the United States

XJ

91

93 95

98 101 103

•

Towards a Hemispheric Capital Market William Rhodes, Vice Chairman, Citibank, USA H.E. Marie Michelle Rey, Minister of Finance and Economy, Haiti H.E. Domingo Cavallo, Minister of Economy, Argentina Enrique Iglesias, President, Inter-American Development Bank

107 109 111 113 114

•

The Evolution of Integration: Bringing Regional Agreements Together H.E. Alvaro Garcia, Minister of Economy, Chile H.E. Cesar Gaviria, Secretary General, OAS H.E. Dorothea Wemeck, Minister of Industry, Commerce and Tourism, Brazil

119

•

•

121 123

126

Toward a Free Trade Area of the Americas Stephen Chesebro', President and CEO, Tenneco Gas, USA Manuel Feliu, President, CEAL, Chile Juan Gallardo, Coordinator, COECE, Mexico Kevin McGrath, President and CEO, Hughes Communications, USA

129 131

Concluding Remarks Hon. Ronald H. Brown, U.S. Secretary of Commerce

141

Appendices

133

136 138

143

145

•

Summit of the Americas Trade Ministerial, Final Joint Declaration

147

•

Western Hemisphere Trade and Commerce Forum Agenda

153

•

National Forums

163

XU

EXECUTIVE SUMMARY

The Western Hemisphere Trade and Commerce Forum -- held over July 1-2, 1995 in Denver , Colorado -was an unprecedented gathering of the hemisphere's public and private sector leadership . The purpose of the forum was to integrate the private sector from the outset in the negotiations for the Free Trade Area of the Americas that leaders have resolved to conclude by 2005 and to solicit advice on how the movement toward trade integration throughout the region can best benefit commercial growth . There has long been a recognition that while trade liberalization is important, in and of itself it does not assure enhanced commercial activity .

Barriers to trade exist beyond tariffs. Inadequate infrastructure, particular domestic policies, and differing legal systems can and do preclude full participation in the international marketplace or make such participation too expensive for many firms .

The forum addressed many of these issues and provided recommendations on how to achieve greater commercial relations throughout the region. Enhanced economic activity has enormous implications for the well being of the hemisphere. The United Nations has estimated that the transaction costs of doing business internationallycan amount to as much as 6-10 percent of the product cost. Reducing these costs not only will make firms more competitive regionally, but globally as well. This in turn will lead to more and better paying jobs. In the United States for example, it has been estimated that export-related jobs pay about 13 percent more than other, comparable, employment. Additionalstudies also indicate that export-oriented jobs are more secure, more environmentally friendly, and use more technology.

The more than 1,200 attendees and panelists who participated in the forum reviewed a comprehensive set of both sectoral and functional issues, all of which in one way or another will have a direct impact on a firm ' s ability to participate in the global economy. Whether improved access to better health care (and thus greater worker productivity) or workplace issues, or access to financing, all panels raised issues which will impact on firms directly. Not only are the countries of the Hemisphere becoming much more integrated globally, they also are affected to a much greater degree than before by a convergence of "non-traditional" commercial/trade issues.

Each of the sectoral working groups provided recommendations, not only for the governments to consider but for international organizations and private sector groups as well. Although the groups were quite diverse , there were themes common to many of the recommendations . Naturally, particular work groups in sectors which have strong regional or international organizations -- such as telecommunications -- provided much greater detail for Ministers and other members of the public and private sectors to consider . Some of the major themes developed by the groups included:

•

Private sector supportfor commercialintegrationand the Free Trade Area of the Americas was strong in virtually all work groups. The discussion in many groups and some recommendations emphasized the importance of private sector involvement in the Free Trade Area of the Americas process, and the need for the private sector to remain aware of developments and advise governments.

•

Reduceand/orharmonizeexistingregulationswhich limit or preclude greater trade and integration.

This view was widespread, especially in areas such as agriculture, energy, transportation, and telecommunications . Country practices are viewed as a major factor in inhibiting trade and investment. There seemed to be widespread recognition of the need for regulation , but also a recognition that greater commercial development, especially for small and medium-sized firms, within the hemisphere will not be possible without significant improvement in the regulatory environment.

xm

•

•

•

•

in many sectors. Consequently, barriers

Technologyand telecommunicationsunderpinintegration

.

.

to access to technology and telecommunications growth can inhibit mtegranon orts create competitive disadvantages. . . · international •institutions govemmental organizationsshould be included in the Regw. n m ons an non-g . . .

• 1 integration process: Group discussions indicated an interest in including existing regional and international organizations in the FTAA AA and integration process, from multilateral lending institutions to business organizations to organizations that are focussed on particular sectors. Groups seemed to want the process to be inclusive and to reach out beyond government to government discussions

•

•

An emphasis on information exchange, training, health, and education suggests _that the groups recognized that in order to make the integration process work, the hemisphere will need a better educated and heatlthyworkforce and management team. Moreover, such efforts will inevitably make the region more competitive internationally.

•

A recognition that there are limited funding resources for a variety of competing objectives and necessary infrastructure projects . Therefore, the emphasis was placed on what governments can do to streamline processes, create greater efficiencies, provide greater opportunities for competition, and find creative ways to enable the private sector to meet some of the demands previously filled by governments and multilateral institutions.

These recommendations will provide a focal point for the continuing dialogue to which Ministers have committed, and the likely basis for amplification in future trade and commerce fora.

Plenary speakers on July 1 reviewed the mandate to create the Free Trade Area of the Americas, and efforts since the Summit of the Americas in December 1994 to move the process forward, including the pivotal event of the Denver Ministerial and its declaration that were completed the day before the forum. Speakers emphasized the commitment of the Clinton Administration to open markets and prosperity hemisphere-wide, the key role of the private sector in pioneer_ing the integration process, in educating the public about why trade is in its interest, and called on the hemisphere to identify and eliminate barriers to trade. Speakers also identified the obligation incumbent upon. the hemisphere to build an efficient transportation system and examined how countnes can raise the financmgnecessary to satisfy the region's substantial infrastructure needs in the coming decade, enhance transparency and increase savings.

The morning plenary panels on July 2 examined the means to create the Free Trade Area by building on the World Trade Organization accords'. cooperation among subregional groups based on the experience gained through existing agree_ments, estabhshmg mutual goals, fostering mutual trust and sharing information, and reaching out to the pnvate sector.

The closing plenary saw the presentation. of the recommendations from the worksho ps that at a met over e two days • and heard remarks from leaders from throughout the hemisphere . key. pnvate sector . . p ere. ese spe ers emphasized the importance of mcludmg the pnvate sector m building Free Trad . . e ea oug usmess . to business transactions, sound governmental fiscal pohcy and consistent laws and .

• · · regu 1ations. ey issues were idenufied mcludmg economies at i 1erent levels of development difference . . . , s o view regar mg 1a or and environment and the need to deve1op hemisphenc infrastructure. The private secto · r can e 1p y prov, mo experience, creative solutions, UJ mg a consensus for and helping to implement the Free Trade Area. o The forum formally addressed thirteen areas of sectoral and functional interest

XlV

•

C

. . omments were directed with

a view toward the notion of what must be done in order to facilitate commercial integration by the year 2005 -- the target date for the Free Trade Area.

During the morning of July 1, seven sectoral panels discussed key issues in commercial integration and on the morning of July 2 developed specific recommendationsto assist policy makers in addressing key questions and developing solutions which will enhance, and not retard, developments in those sectors.

•

At present, the hemispheric telecommunications industry is "marked by impressive technological advances, sweeping regulatory changes, and rapid moves toward free markets." There remain however, significant barriers that inhibit market access and growth : including technical barriers, unauthorized use of the network, lack of network access, competitive disadvantages of developing nations, trade barriers, "knowledge" barriers, and adequacy of current technologies to create the global networks of the 21st century. Panelists agreed that critical and timely efforts are needed to find a way to address these barriers creatively in order to attain hemispheric economic integration by 2005 .

•

The booming demand for power generation capacity, the continuous necessity to explore natural resources in an environmentally-responsible manner, and the urgent need for enormous investments in the energy sector are creating unprecedented challenges and opportunities for cooperation among all the countries of the Americas and the private sector. Overall economic expansion, improved service for energy users, and reduced government funding outlays, which are the three driving forces behind the restructuring of the energy sectors throughout the Americas, would be the prime beneficiaries of such regional cooperation. The private sector will be the key player in our integration in terms of building, providing equipment and services, and investing, while the role of the public sector will be that of a catalyst and a regulator. The development of a reliable and predictable hemispheric energy market will inevitably not only benefit local economic growth but also improve hemispheric trade ties.

•

Panelists and members of the audience discussed the benefits from greater integration of and cooperation relating to the hemisphere's transportation system. They saw substantial benefits accruing to the region's economies from improved and integrated transportation infrastructure, more open less regulated trade, harmonized technical and operating procedures, and the increased use of modern technologies.

•

In agribusiness, there are many opportunities for gains to the entire hemisphere from greater commercial integration. The Uruguay Round agreement, which brings agricultural trade under world trade disciplines for the first time, forms a sound foundation for this integration. But, participants identified many other important issues that trade negotiators must resolve before integration can become a reality. Since these issues are so complex , and given the importance of agriculture , participants supported giving agricultural issues priority in negotiations leading to the creation of the Free Trade Area of the Americas (FT AA).

•

Travel and tourism, often overlooked as a source of foreign exchange, also can be a catalyst for further commercial activity . Therefore, commercial integration will have a profound effect on the sector and greatly increase opportunities for expansion . Discussions identified impediments to expanding travel and tourism-related trade and investment and focused on the use of technology for tourism promotion and the overall development of national tourism policies to encouraging and expanding private sector investment.

xv

•

Health care is an area which can benefit from closer integration, such as telemedicine -- which can provide lifesaving linkages but it is important to recognize that such medicine would be more clinical rather than preventive . Thus existing regional organizations such as the Pan Amencan Health Organization (P AHO) will continue to play an important role in improving the overall health of the hemisphere . Respect for intellectual property rights also will permit more advanced medicines to be marketed and it will be important to contain costs as well.

•

Increasingly, concern for the environment has become interrelated with other questions of economic develpment Environmental policies often have been seen as barriers to trade in many naations, and it 1s 1Il1portant that the private sector participate in the development of pohc1es which will affect It. Environmental infrastructure should be considered a key component of every country's economic development strategy since it would ensure the efficiency and competitiveness of production , and the social and economic well being of all citizens of the region. Policies should , however, be consistent with the level of development of each country; few countries can afford to dedicate limited resources and energy on wasteful environmental policies.

There also were six functional workshops that met in the afternoon of July 1: standards ; legal systems ; small and medium-sized businesses; information; private sector financing; and, the workforce.

These pane ls examined issues that cut across sectors. Although not specifically charged with providing recommendations to Ministers, each panel sought to develop ideas which would foster the integration process .

•

One panel reviewed the commitment concerning standards in the Denver Ministerial Joint State ment and discussed how the private sector should support this political commitment.

The panel also acknowledged the importance of standards and conformity assessment procedures to international tr ade and discussed specific recommendations to ensure that the harmonization of standards and conformity assessment procedures serves the interests of all parties.

•

Panelists from the public and private sectors of Brazil, Ecuador, Mexico, Peru, Venezuela and the United States discussed the role of legal systems in enhancing hemispheric integration . Two panel discussions focused on integrating commercial law systems and on alternative methods of solving private international commercial disputes . For example, the harmonization of trade and commercial laws, regulations , and practices would facilitate the cross border movement of goods , services, and transactions -- this could reduce the costs of doing business and reduce the potential for corruption.

•

Panelists emphasized the importance of small and medium-sized enterprises (SMEs) to the process of job creation and hemisphere integration the discussion examined the impediments SMEs are facing in today. s market and _identified potential solutions that could be implemented by both the private and pubhc sectors , ind1v1duallyand collectively through the Free Trade Area of the Americas (FT AA). Panelists urged that the Free Trade Area of the Americas offer SMEs the capability to effectively compete and that governments must create an environment conducive to growth of SMEs .

•

The information marketplace panels focussed on intellectual property rights and the access to information.

In the .midst of a technological explosion, it will be very important to establish international norms for intellectual property protection. It will require a responsible balan cing of the interests of the creators in exerc1smg the mtellectual property rights of their works as well as the interests of users in obtaining access to thoseworks. Information infrastructure will be developed only

xvi

in response to creators and service providers on the one side and consumers on the other. The role of government will be to adopt rules to promote free and open competition . •

The private sector financing workshop focussed on the continuing need for hemispheric governments to promote privatization and liberalization of trade and investment as critical steps for attracting foreign private capital and for expediting economic integration of the hemisphere. Some of the workshop recommendations--such as continued and sectoral diversification of privatization efforts, development of capital markets through pension and insurance reform, and improved reapponionment of risk between project developers, multilateral development banks, and regional governments--were also echoed in other Forum workshops (e.g ., Energy workshop) . Infrastructure funding is critically dependent on private capital flows and the related requirement of governments to create environments that can attract private investment.

•

The success of the process of Western Hemisphere commercial integration and free trade - that will culminate with the creation of a Free Trade Area of the Americas by the year 2005 - depends on workplace issues such as worker skills, labor-management cooperation, and labor standards that affect the productivity of the workforce . These workplace issues, in turn, have also an important bearing on how the benefits of commercial integration and hemispheric free trade are distributed throughout the labor force.

None of the issues raised during the forum will be resolved overnight, and indeed some may never be capable of resolution. What is critically important, however, is that a process which recognizes the dynamic nature of private entrepreneurship and the necessity of includingthe private sector in the negotiations from the outset, has begun. At the end of the day, closer commercial ties will have been established which will reinforce the political and economic decisions taken to support the Free Trade Area of the Americas. Practical approaches to practical everyday problems will be the legacy of this forum and hopefully for the fora of the future, starting with the 1996 forum in Cartagena, Colombia.

xvu

The Sectoral Recommendations Western Hemisphere Trade and Commerce Forum Denver, Colorado July 1-2, 1995

Recommendationsfor the TelecommunicationsSector Trade Ministers are encouragedto: Act to improve information infrastructures -- telecommunications, information technology , and broadcasting -- identified in the Summit of the Americas' Plan of Action as II an essential component of political, economic, social and cultural development. 11 Liberalize import/export restrictions within the Western Hemisphere in order to allow the unrestricted flow of all telecommunications products, including those with encryption capabilities .

Support the work being done on regional guidelines for equipment certification procedures and common guidelines for the provision of value-added services by Western Hemisphere nations and private companies in the OAS's Inter-American Telecommunications Commission (CITEL).

Ensure that the working group on services established at the Trade Ministerial in Denver includes all telecommunications services and coordinates with CITEL to take account of CITEL' s work on valueadded services.

CITEL is encm1ragedto: Accelerate its work in contrasting and comparing the different legal systems impacting each nation ' s telecommunications environment in order to understand the system's interrelationship to trade and information infrastructure issues.

Continue collaborative effort with the International Telecommunications Union (ITU) in pursuit of common regulatory frameworks, technical standards, equipment certification procedures , and guidelines for basic and value-added services based on the principles of non-discrim ination , transparency and objective criteria.

Analyze problems associated with the provision of international satellite services.

Individual Governments are encouraged to: Ensure universal access to existing and emerging telecommunications technologies, including alternative technologies , removing all technical and administrative barriers to such access .

Create awareness that the introduction of competition and open markets requires that clear and stable Jaws, regulations and policies with adequate safeguards must be put in place.

As soon as possible, and not later than 2005, adopt new telecommunications legislation in all countries of the Western Hemisphere, allowing competition and authorizing free entry into intra-country markets.

As soon as possible, and not later than 2005, adopt new regulatory structures in all countries of the Western Hemisphere, separating the regulatory entity from the telecommunications operator and

3

modifying existing regulatory frameworks to allow a smooth transition from curreru controlled traditional mar el mechanisms ro open. competitiYe markets.

Establisha regulatory frameworkcapable of adjusting to technological change to ensure the protection of inellectual propeny rights, privacy and security of information.

Plan phased rare-rebalancing in order to

evolve to cost-based rates, and seek improvement in the

international senlemems process .

Review radio spectrum planning and managemeru and current standards-setting processes in order to increase speed and responsiveness to markets, and reduce discretionary use of authority .

Support a strengthened role for CITEL in fostering cooperative efforts with the ITU to ensure maximum network and equipment compatibility and interoperability.

Participateas full members in the egotiatiag Group on Basic Telecommunications Services ( GBT) in the World Trade Organization (WTO), scheduled to complete its talks on trade of basic services

by April 30, 1996.

At the nexr meeting of trade ministers in Colombia, identify telecommunications, information services, and broadcasting as critical elements for establishing the Free Trade Area of the Americas and for the achievement of social and economic progress.

The Private Sector is encouraged to: Establish a private sector working group of Western Hemisphere company representatives to develop

a common regulatory framework for effective introduction of competition, which will be presented at the 1996 Ministerial Meeting to be planned by CITEL. Acknowledge that education is the principal tool to spur development, initiate several pilot projects on distance learning and remote education, and seek support from Western Hemisphere companies.

Seek a wider base of support for the Americas Healthnet and AgriNet Americas Pilot Projects, which have been initiated by Caribbean/Latin American Action (CLAA), in collaboration with the Pan American Health Organization (PARO), CITEL, private telecommunications and medical related companies, the Inter-American Institute for Cooperation on Agriculture, private companies, and other groups.

Recommendations for the Energy Sector Governments need to assure monetary stability, if objectives for private investment in infrastructure are to be met; Governments must create ~ stable regulatory enviroment investments and that 1s consistent among states and nations;

4

for the energy sector that facilitates

Governments should foster policies that are conducive to the existence of a competitive and transparent energy sector; Where countries chose to retain national energy companies, to examine the complex issues related to participation of state-owned companies along with private ones in a competitive, transparent market; To encourage governments to emphasize demand-side management, including energy efficiency, in order to reduce the amount of additional capacity needed; To promote the parallel development of capital markets and the opening of the energy sector to private sector participation, through pension and insurance reform among other measures; To facilitate hemispheric integration through regional grids and pipelines; To encourage multilateral development banks to develop alternative financial instruments to support private infrastructure projects; To pursue the development of multilateral investment treaties to reapportion risks for project developers and improve the efficiency of project transactions; To promote information exchange among all participants in the domestic energy sector; To create a hemispheric forum of utility regulatory commissions to discuss technical, economic, and policy issues .

To encourage the establishment of regulatory research centers to disseminate research on regulatory issues pertaining to the energy sector.

To encourage universities to include the public utility field in the curricula for technical, economic, legal, and public policy studies.

Recommendationsfor the TransportationSector Support and encourage the convening and work of the proposed Hemispheric Transportation Ministerial Meeting, which would develop further the concepts articulated at this workshop and the October 1994 Tampa pre-Summit Transportation Conference . Continued senior level involvement in cooperative efforts is required to ensure their success.

Governments should keep the economic regulation of transportation and related services to the minimum necessary to meet public policy objectives, and should rely to the maximum extent possible on market forces to determine the mix of services and prices to be offered . It was suggested that multilateral initiatives should be launched to liberalize all modes of transport services, but especially open skies for air services.

5

Adopt, as a minimum international standards for safety and environment in the construction of transportation infrastni'cture and equipment, and for operations in all modes of transport, ensuring minimum costs to communities.

Governments of the hemisphere should jointly explore ways to reduce unnecessary rules and regulations, and barriers that impede cooperation among transportation firms of different countries and entry to transport markets.

Raise governments' awareness of the commercial costs of theft, armed boardings, and hijacking and encourage them to support private sector efforts and to become involved in hemispheric and international efforts to improve transportation security.

Encourage governments to join international efforts to facilitate the movement of goods and people across borders by streamlining and harmonizing customs, inspection, and clearance procedures wherever possible and through the introduction of new technologies, such as electronic data interchange, and the elimination of unnecessary requirements.

Encourage the exchange of informationon the region's transportation systems and services, including regulatory regimes, traffic data, and operating requirements.

Encourage the exchange of information between firms so the private sector can develop the mo t efficient ways to transport goods and people.

Encourage governments to work with international financial organizations, such as the World Bank, the Inter-American Development Bank (IDB), and the International Finance Corporation (IFC) and private financing groups to develop innovative ways to finance infra tructure projects vital to the hemisphere's transportation system.

Examine alternatives for governments and/or the private sector to provide safeguards for long-tenn private investments m mfrastructure concessions.

Encourage the harmonization of surface transportationlaw with regard to liability for damage to goods and third parties through the development and use of a uniform truck bill of lading.

Recommendations for the Agribusiness Sector Agricultural issue_sshould be given priority in negotiations leading to the creation of the Free Trade AA( Governments should try to resolve these issues early in the ten-year Area of the Amencas process, rather than wait until the end.

FTAA

All countries in the. hemisphere should move rapidly to implement all Uruguay . . uguay R ound agncu ltural traderequirements,111clud111g those related to market access• subsidies and sanuary an p hytosarutar ¡ y measures.

6

Further discussions of agricultural issues, and the development of appropriate solutions, should take place in other fora, including the following: Working groups established by the Western Hemisphere Trade Ministerial, June 29-30 , 1995.

Meetings of the Inter-American Board of Agriculture (IABA). Ministers of Agriculture will meet as the Board in September, 1995 in Costa Rica .

Second Annual Hemispheric Conference on Agribusiness in the Americas , Miami , December 4-6, 1995.

Customs/Trade/Finance: Symposium of the Americas, Miami, February 25-27, 1996.

The following issues should be addressed by the Working Group on Sanitary and Phytosan itary Measures: Harmonization of measures, to reduce trade impedimentswhile protecting human, animal and plant health and safety.

Formal recognition of equivalent measures .

Elimination of sanitary and phytosanitary measures that function as trade barriers but have no scientific justification.

Improvements in transparency of measures and in enforcement mechanisms .

Quarantine and inspection delays - improvements in procedures, especially for perishables.

Reformed and streamlined approval procedures for adding new products for permissible import.

Establishment and maintenance of mutually-recognized pest or disease-free zones.

The following issues should be addressed by the Working Group on Subsidies, Anti-Dumping and Countervailing Duties: Appropriate disciplines on assistance to low-productivity agriculture.

Reduction or elimination of export subsidies and other trade-distorting subsidies and market interventions.

Improvements in the administration of antidumping and countervailing duty laws .

The following issues should be addressed by the Working Group on Standards and Technical Barr iers to Trade: Harmonization of food product labeling regulations .

Harmonization of agricultural product grades and standards.

The following issue should be addressed by the Working Group on Market Access : Phasing out of tariffs and other market access barriers .

The following issues should be addressed by the Working Group on Customs Procedures and Rules of Origin: Making drug-related inspections less disruptive to legitimate trade, especially for perishables.

Rules of origin and product classification .

The following issues should be addressed by the Working Group on Smaller Economies : Maintenance of access to U .S. and other markets now enjoyed on a preferential basis by many smaller countries, e.g., under CBI or GSP .

Possible adjustment assistance or special transitional provisions for smaller economies .

The following issues should be addressed in connection with Agrinet-Americas: 7

Lack of continuity andcross-country communication for private sector input into commercial integration negotiations; need for instirutionalization of hemispheric-wide private-sector advice.

Lack of timely, comprehensive agricultural market information that is readily available to small and medium-size agribusiness enterprises in the Western Hemisphere Appropriate negotiating fora should be identified to address the following agricultural issue : D ispute resolution mechanisms that would cover conflicts arising our of sanitary and phytosanitary measures, marketing orders, and other agricultural policies.

Environmental and sustainable agricultural issues.

Hemisphere -wide mechanisms should be established for private-sector input to the deliberations of the Working Groups and other negotiations leading to the creation of the FTAA AA. E ach country in the hemisphere should adopt appropriate economic policies that will support hemispheric integration, including the following: Sound macroeconomic policies leading to economic stability and a predictable framework for improving trade.

Deregulation, privatization andother economic reforms to improve competitiveness. through greater productivity and economic efficiency.

Improvements in transportation infrastructure, and reform of domestic and international transportation regulation, to improve productivity and lower costs.

T he mov e toward greater integration should be accompanied by a convergence of existing trade agreements, which can impose duplicative or conflicting requirements on agnbusiness enterpri es and governm ent agencies. A useful first step would be a survey of these agreements on agriculture in the he misph ere , to assess the need for harmonization or convergence under the FTAA AA.

Recommendation s for the Tourism Sector

Political/Economic

Impartance

That all governmen ts should · a very strong, an , in . recognize that the travel and tourism industry is some coun tr ies , .the mos t lmportant tool for. providing employment expo · 1 an . r gro an regiona national econorruc .development through foreign, mvestrnent and trade • Pre si ents s ou give pnon · . . to travel and toun sm within the governments international trade policy and planning.

That the participat ing countries of The Hemispheric Trade and Co F th · th · · th Hi mmerce orum e 1evate e national toun sm au authorities to e 1ghest leve l within their go . the . . . vernments, as reflected m e Declaration of Orl ando from the Hem1sphenc Tourism Ministerial The . · · · • and e Declaration of Buenos Aires durmg the Exec utive ounc 1l Mee tmg of the United Nations /W . .

(UN/WTO). or 1d Tounsm Orgaruzauon Given the instrumental role of the U .S . Travel and Tourism Administration . . . coordinator for the hemispher ic tourism fac ilities; and given Administration (USTT A) as the pnmarY negative repercussions that could 8

occur at this particular time in the hemispheric negotiation process; we hereby request on behalf of all private sector tourism representatives that the Secretary of Commerce do whatever possible within his reach to keep the office of the USTT A funded , as it is instrumental in furthering commercial integration in the travel and tourism industry throughout the Americas .

That to ensure continual tourism growth and development, governments must preserve and protect the natural resources of the area (sustainable development).

Policy Coordination That each country organize a private entity that will unite all the private industries which are Jinked to travel and tourism. This organization should be in charge of lobbying for the industry with the different governmental agencies.

That periodic regional meetings of governmental tourism authorities, non-profit organizat ions and private sector industry representatives be held to discuss the development of a hemispheric tourism policy, incorporating challenges to be addressed for commercial integration .

Hannonization Measures That, to facilitate the harmonization for measurement of tourism flows throughout the hemisphe re , governments are encouraged to adopt the UN/WTO Definitions and Standards.

That the countries from the Hemisphere should make an effort for harmonizing their foreign investment legislation. The Guidelines on the Treatment of Foreign Direct Investment developed by the World Bank Group should serve as the basis for this undertaking.

That countries negotiate bilateral treaties among themselves on the protection of foreign investment and avoidance of double taxation.

Eliminationof Barriers/Facilitation That tariff and non-tariff barriers which directly or indirectly prevent the circulation of tourism -related goods and services be eliminated, including restrictions on promotional and exhibition materials.

That tariff and non-tariff barriers be eliminated which directly or indirectly prev ent the flow of travelers, such as visas and departure fees .

That governments should emphasize the security of people traveling to their countries as well as the general stability and security for investment.

That at least some portion of the value added taxes be returned to the travelers purchasing retail goods exported from the country, in an uncomplicated way .

That governments strongly support a policy of open skies to all airlines that comply with all security regulations.

9

That governments encourage joint airline traffic programs for more efficient flows of travelers and encourage the privatization of airports and related services to reduce costs to the travelers and the airlines involved.

Marketing That the primary focus of each area's tourism strategic marketing position and promotion should be the area's culture, inclusive of the people, as well as the local, regional , historic, and geographic attractions, thus capitalizing on the genuine and unique local flavor of the area .

That each country establish policies that will reinforce the regional tourism exchange .

That governments identify a liaison person/team to be responsible for collaboration with international organizations, such as Multilateral Investment Guarantee Agency (MIGA) to use technology to share travel and tourism related information to market investment opportunities in the Americas .

That both tourism providers and consumers throughout the hemisphere be encouraged to use the most modem information technology. This would effectively unite and enhance the supply and demand of tourism by increasing the utilization of telecommunication channels and information networks, which contain large databases of tourism-related information.

Recommendations for the Health Technology Sector Form international panels to prepare stages and processes for health care technology and services.

Create a profile for each country's needs and requirements for the integration process.

Develop mechanisms for creating partnerships between the private and public sectors in health issues.

Include international agencies, such as the Pan American Health Organization (PAHO) , in the design of a common strategy to address health integration issues.

Recognize Intellectual Property Rights' (IPRs) social and commercial net benefits.

Harmonize standards for health-related products and services as well as malpractice reform .

Recommendations for the Environment Sector Recognizing: That trade, economic and environmental policies are increasingly interrelated .

That environmental regulations as a barrier to trade are a concern to many nations .

10

That environmentalinfrastructureinvesbnent should be considereda key component of every industry sector and every country's economic development strategy as it will ensure the efficiency and competitivenessof production, and the social and economicwell-beingof all citizens of the Americas.

That environmentalpolicyshouldbe consistentwith the level of developmentof the country and should benefit people. Few countries can afford to dedicate energy and resources on wasteful environmental measures.

That environmentaltraining and capacity building are of great importance.

That environmentalcooperation,education,and technicalassistanceare the best vehicles for expanding each country's sovereign right to set its own environmentalstandards.

That the participationof the private sector, includingsmall and medium-sizedenterprises (SMEs), and non-gov.ernmentalorganizations,throughoutthe process is essential.

It is Recommended to Trade Ministers that: Sustainable development be incorporatedinto the formal working group process, in each of the work groups,throughoutthe discussions of trade integration. Sustainabilityshould also be made an integral part of existing multi-lateral institutions and their treabnent of economic, political, and social issues.

Governments incorporate the participation of private sector, includingSMEs, and non-governmental organizations into the environmentaland trade law makingprocesses.

Governments increasethe enforcementof their own country'senvironmentalregulations and encourage industries to participate in voluntary environmental management, self-auditing and self-policing initiatives.

Governments encourage their industry to participate in the ISO 14000 process and other voluntary pollution prevention and control initiatives thereby reducing the need for command and control environmental legislation.

Governments act to ensure that environmentalprotection standards and regulations do not represent unfair and unacceptable barriers to trade.

Governmentsin the hemisphere discuss and identifyappropriate means to encourage industry to adopt policies of sound environmentalstewardship.

It is Recommended to Appropriate Government Officials that: Eachcountryidentify, in concert with the private sector and non-governmentalorganizations (NGOs), its own environmentalprioritiesand presentthoseprioritiesto the meeting of ministers at the Sustainable DevelopmentConferenceto be held in Bolivia in 1996.

Regional institutions, such as the Commission on Environmental Cooperation (CEC) and OAS, be strengthened to ensure appropriate collection, analysis and dissemination of basic environmental information.

11

Environmentbe integratedinto education programs in elementary schools for example, as a wa to help educate society and as a first step toward required environmental awareness throughout the hemisphere .

Environmental awareness should also be increased through greater dissemination of environmental information .

A hemispheric conference (perhaps a Specialized Conference of the Organization of American States) be held on the identification and follow-up policies of environmental concerns of hemispheric nature (e .g ., how to deal with transboundary environmental issues, continental transportation of toxics , management of migratory species and their habitats).

Governments throughout the hemisphere encourage multi-lateral and major government lending institutions to make environment, particularly institution building (e.g., technical training, information exchange, technology demonstrations, etc.), a higher priority.

Countries be encouraged to endorse and implement global environmental treaties .

12

The Workshop Summaries Western Hemisphere Trade and Commerce Forum Denver, Colorado July 1-2, 1995

SECTORAL WORKSHOP I: ''BUILDING THE FOUNDATION OF A HEMISPHERIC INFORMATION INFRASTRUCTURE"

Summaryofof Discussions There was general agreement that, at present, the telecommunications industry is "marked by impressive technological advances, sweeping regulatory changes, and rapid moves towards free markets, " in the words of Ernst Burri, President of CODETEL in the Dominican Republic, and the Moderator of Panel 1. All speakers presented statistical evidence of the economic growth that has resulted from competition, privatization, and liberalizationin the tekcommunications sector. Some panelists discussed existing barriers that inhibit market access and growth, which include technical barriers, unauthorized use of the network, lack of network access, competitive disadvantages of developing nations, trade barriers, "knowledge" barriers, and adequacy of current technowgies to create the global networks of the 21st century. Panelists agreed that critical and timely efforts are needed to find a way to address these barriers creatively in order to attain hemispheric economic integration by 2005.

SUMMARY OF PANEL 1: "NEW TECHNOLOGIES: SHAPING THE INFORMATION INFRASTRUCTURE FOR HEMISPHERIC ECONOMIC INTEGRATION"

The first panel was introduced by Secretary of Commerce Ron Brown, who stressed the fundamental relationship of the information infrastructure to sustainable development in the hemisphere as a whole.

Fourth, access to networks by customers must be improved. Alternative methods of access (calling centers, cellular) should be considered . An adjustment in the current accounting/settlement arrangement should be considered so that developing countries can better finance telecommunications development .

Ernst Burri, President of CODETEL in the Dominican Republic, opened the panel by identifying seven challenges to shaping the Hemispheric Information Infrastructure:

Fifth, the full range of telecommunications applications should be promoted ,

First, technical barriers must be eliminated to allow many different communications and computing systems to work together through open network architecture and standardization throughout the region;

Sixth, trade barriers must be eliminated .

Lastly, Burri identified the need to eliminate "knowledge barriers " through education and training of both workers and customers .

Second, security measures and intellectual property protection must be improved to prevent the unauthorized use of networks.

Fernando Borio, Secretary General of TELEFONICA in Argentina, spoke on the benefits of fiber optics and digital technologies, using Argentina as a case study. He pointed out the great disparities in telecommunications development that currently exist in the hemisphere. He stated that two different levels of telecommunications development coexist today,

Third, capacity constraints must be overcome for both current demand and future projections.

15

Joost van Damme , Vice Pr esident of TELEBRAS in Brazil, focused on the special problems facing rural and remote areas . Brazil. which despite its status as one of the largest

creating a juxtaposition of countries that have reached a very high level of teledensity vis-a-vis the vast majority of countries , which are still striving for universal service . This juxtaposition in degrees of development requires that the regionalization of telecommunications and the effort to incorporate global trends must be analyzed, taking into account the social, economic, demographic and cultural realities of each country in question, as well as its degree of economic development. Regional integration must build on the common denominators we share, including the need to develop the most efficient networks possible. One common denominator today is the move to digital communications and fiber optic cable.

Since privatization in 1990, the two regional telephone companies in Argentina have made tremendous progress in upgrading and expanding their networks through the use of fiber optics. By 1998, both networks will be completely digitized.

countries in the world has relatively low telephone pe netration, is experimenting with a number of solutions to enable ruraJ users to have telephone service. Cellular, Van Damme said, is primarily a telecommunications option in urban areas . In Brazil , expanding cellular to remote areas is too costly .

Single channel radio and satellite communications have been good solutions in some part s of Brazil.

Satellite linkages are very expe nsive aJso, but Brazil is making the investment.

Repre senting Celumovil d e Co lombia , Maria Cristina de Mejia talked about the advantages of cellular technologi es .

Business today. she explained, demands timely and reliable acce ro inform ation.

Citizens also need access to information to parti cipate fully in democratic processes . De Mej ia reviewed the case of Colombia , where Celum ovil began operating exactly one year ago . Subscr ibe r growth has been tremendous and man y jobs have been created through the huge growth of cellular in Colombia .

Colombia' s current goal for the year i to achieve 20 telephone lines for 100 people. De MeJia stressed the need for reoulations that are a flexible_ as techn ology in order to promote mnovat1on and to furth er expand nontraditional telecommunic ations techn oloo ie . She clo ed by s .

• suggesting that the panel recommend to governments to endorse cellular, a well a other wireless technolo gies, to build the hemi pheric mformation infr astructure.

Borio said that in order for telecommunications development to occur, a strong legal framework must be in place in order to encourage investment of capital to finance network development. The following basic principles must be established : existence of universal basic service; establishment of an integral legal framework for the sector ; establishment of a regulatory symmetry principle; limitation of license concessions in terms of claimants' actions; establishment of a reciprocity principle; establishment of technical and economic terms regarding interconnection; establishment of an adequate rate system; and determination of equitable, balanced guidelines to protect consumers.

He concluded by stating that liberalization and competition must be preceded by defining regulatory framework, whose clear and equitable rules are based on the principles of legal certainty, reciprocity and symmetry . He stressed that there is a necessity to create a reasonable tariff structure based on real costs, and expressed his sense of a general concern related to the extension of universal basic service and how it can be financed.

2000 is

The next speaker, Maria del Rosario Medero Ranzini, President of ANTEL in UrugUay, discussed cellular solutions to rura l and remote locations · ruguay, she explamed, 1denu 1e lluJar technol · ogy several year s ago as a potenua answer to pro lem of expand ino access remote custo . mers . Whil e Uruguay has one of the h . est teleph · A . one penetratio n rates in Laun menc a this pen tr . ·& ' e atton has not been uru1orn1S ome area s of u ruguay have speciaJ problems,

u

16

.

should move to a system of multilateral equipment testing, so that equipment can be exported and used in second countries as easily as possible . Fourth, spectrum management can be better coordinated in the hemisphere. Use of the radio spectrum should be allocated through competitive processes .

Telephone numbering should be coord inated multilaterally so that future problem s with lack of numbers will be averted .

including lack of electricity and difficult terrain.

ANTEL, the Uruguayan operator, wanted low-cost technology to provide the last mile via radio.

Cellular proved to be the best choice. The benefits of cellular in Uruguay have been reduced rates, better coverage, and faster telephone installation.

By the end of 1996, the whole country will have access to cellular service . Although ANTEL was not able to privatize in 1992 due to lack of public support, ANTEL still sees private investment as the key to telecommunications development.

Porter highlighted the "convergence of competition" which must occur : barriers to entry for both equipment and service must be elimina ted, legal systems must allow for multip le competi tors in all services , rights of way must be made available to operators, regulators must be separated from operators and settlement arrangements mu st be based on costs . Finally, all providers and governments must remember that none of these improvements means anything if, together , we cannot or will not provide the telecommunic ations services and products that c1t1zens want; customers' needs cannot be ignored .

David Porter, AT&T's Vice President for Technology and Infrastructure, stressed the abundance of telecommunications technologies available, including older technologies that can be used much more efficiently today, such as copper wire. Instead of focusing on the technologies themselves, he reviewed a number of barriers that inhibit the best use of technology. First, he said that export restrictions on high technology, including digital transmission systems, must be removed.

Second, hemispheric equipment standards should be coordinated. Third, the region

SUMMARY OF PANEL 2: "TELECOMMUNICATIONS POLICY AND REGULATORY STEPS TO ACHIEVE ECONOMIC INTEGRATION IN THE AMERICAS"

service, which was descr ibed as "mor e service to more people in more towns;" and

General themes discussed by all panelists in the second panel were the following: Privatization or impending restructuring of the telecommunications entity and the percentage of annual economic growth that has resulted;

The need to address complex policy issues, such as rate reb alancing and eliminating subsidies for local service .

Specific comments from the speakers included:

The benefits of new legal and regulatory frameworks that separate the operator from the regulatory body;

Claudio Garcia, Senior Corporate Vice President and Chief Financial Officer of Compania de Telefonos de Chile, stated that without privati zation of telecommunications in Chile in 1988, which resulted in 6 percent economic growth annually over the past 10 years , telecommunications would have been a bottleneck for economic growth in Chile;

The amount of annual investment in the telecommunications network provided by private companies and the resulting growth of the network in terms of the penetration rate; The constant necessity to balance the need for competition with the need for universal 17

Jaime Chico Pardo, Director General of TELMEX, asserted that although U.S. companies are permitted to offer telecommunications services in Mexico under current U.S. law, TELMEX is no~ allowed to enter the U.S. market; Rolando Rivas, Director General of TELCOR in Nicaragua, stated that although Nicaragua has been moving toward privatization and liberalization since 1992, very few neighboring countries have been involved in similar activities, despite the Buenos Aires Declaration and the Declaration from the Summit of the Americas endorsing competition in the telecom sector; and

In his presentation, Jose Soriano, Director General of CONATEL in Venezuela, said that some countries have raised important questions regarding the growth of national information infrastructures. These include: How to prevent predominance in interhemispheric relations of those countries that are rich in technology over those that are not?

(2)

How to promote technology transfer and the development of human resources?

(3)

How to resolve the problems of national sovereignty that arise in provision of cross-border services?

How to balance asymmetries in the degrees of development and openness of some developing countries in contrast with the existing limitations on openness in some of the developed countries?

(5)

Finally, how to develop mechanisms to implement the principles proposed in the Global Information Infrastructure initiative in a fashion to guarantee the equality of opportunities and justice for all countries in the world?

Soriano stated that these questions point towards the critical issue of ensuring that all countries simultaneously adopt regulatory frameworks for telecommunications that are sufficiently flexible.

In light of these questions, he proposed studying the possibility of creating a new global regulatory framework in the form of a treaty or international convention or agreement to which the majority of countries would adhere, which would contain internationally accepted rules governing the creation of a physical and conceptual global infrastructure, which will serve as the frame of reference for national and regional development for the service of all, and would also be consistent with the Forum's objective of regulatory flexibility in the development of a genuinely global information infrastructure. One means among many would be to restrengthen the growth of the International Telecommunications Union (ITU), OAS's Inter-American Telecommunications Commission (CITEL), WTO, and other multilateral organizations that are considered beneficial fora in which to discuss GIi development.

Jorge Kunigami, President of OSPITEL, discussed "investmentwithout borders in Peru," which permits foreign investment in all new technologies. He stated that in Peru, vertical integration is allowed in all telecom services that are provided by the same operator. Thus, in terms of telecom sector growth, a 20 percent yearly increase is estimated for the following four years.

(1)

(4)

At the end of the discussion, U.S. Department of Commerce Assistant Secretary Larry Irving introduced the proposal for the endorsement of two pilot projects, Americas Healthnet and AgriNet Americas, and encouraged Latin American companies to join U.S. companies to ensure their future success. The Americas Healthnet program, which is currently underway in Costa Rica, will set up a network connecting rural areas to six hospital locations in the metropolitan medical center. The

18

network development if the goal of universal service is to become a reality. Equitable guidelines to protect the consumer and to ensure equal access to the network must be established .

AgriNet Americas initiative is an effort to make new technologies, market information, and other resources on agricultural trade and investment availableto small, medium, and large agricultural companiesin the Western Hemisphere through the developmentof an electronic network. These pilot projects will be led by Caribbean/Latin American Action (CLAA), in collaboration with the Pan American Health Organization (PAHO), CITEL, private telecommunications companies, medical relatedcompanies, the Inter American Institute for Cooperationon Agriculture, and other groups. In addition, there was a proposal to initiate several pilot projects on distance learning and remote education, and to seek support for them from Western Hemisphere companies.

In the discussion on the second day, building upon a recommendation made earlier by Jose Soriano regarding the creation of an international regulatory system upon which to create a Global Information Infrastructure, Maria Cristina de Mejia made a formal proposal that a private sector group be formed to follow up on the Recommendations that emerged from the Workshop. Specifically, she proposed:

"The adoption of an interamerican convention or treaty that contains the necessary points to ensure the realization of the principles of telecommunications, adopted by the Hemisphere's Presidents at the Summit of Miami, which will make it possible for the creation of the information superhighwayto become a reality on the American continent, for the benefit of all its inhabitants .

Conclusions There was general agreement that effective regulation, competition, and liberalization of the telecommunications environment will allow telecommunications to serve as an engine of growth for national economies. Three pilot projects involving health care, agribusiness and distance learning were supported by Workshop participants, and recommended as interesting future telecommunications activities.

Within the spirit of the Miami meetings and as the most effective means, a Committee of telecommunications business leaders [should] be formed, which will elaborate and present a plan of work, [in the form of] a treaty, as deemed appropriateby the Forum, that will assume all the costs that are required for its work."

There was concern expressed regarding the provision of universal service and its financing, with general concurrence that rational tariff structures must be put in place with advance planning for phased rate adjustments. Workshop participants agreed that liberalization and free markets require defining the rules of competition in advance, with agreement on the technical and economic terms for interconnection, and clear, firm regulationsto guarantee institutional stability.

Legal systems governing the information infrastructure must be in place in order to finance

It was agreed that this private sector working group of Western Hemisphere company representatives will work to develop a common regulatory framework for the effective introduction of competition,which will be presented at the 1996 MinisterialMeeting to be planned by CITEL. The first meeting of the working group will take place in Colombia.

Recommendations White Papers on "Building the Foundation of a Hemispheric Information Infrastructure, " which were preparedfor the Summit of the Americas and

These recommendations were elaborated to complement and reinforce the Declaration and ActionPlan of the Summit of the Americas and the 19

pa rts of the Information Infrastructure W,or shoip •

the Hemispheric Trade and Commerce Forum.

These documents are considered to be integral

conclusions and recommendations, which

s follow.

(ITU) in pursuit of common regulatory standards frameworks, technical . . n equipment cert, 1cat1on procedures guidlines for basic and value added services based on the principles of . . . . nondiscrimination, transparency and objective • • !Ve cntena.

Trade Ministers are encouraged to: Act to improve information infrastructures telecommunications , information technology, and broadcasting -- identified in the Summit of the Americas' Plan of Action as an essential component of political, economic, social and cultural development . ti

Analyze problems associated with the provision of international satellite services.

ti

Liberalize import/export restrictions within the Western Hemisphere in order to allow the unrestricted flow of all telecommunications products, including those with encryption capabilities.

Individual Governments are encouraged to.: Ensure universal access to existing and emerging telecommunication s technologies, including alternative technologies, removing all technical and administrative barriers to such access.

Support the work being done on regional guidelines for equipment certification procedures and common guidelines for the provision of value-added services by Western Hemisphere nations and private companies in the OAS's Inter-American Telecommunications Commission (CITEL) .

Create awareness that the introductionof competition and open markets requires that clear and stable laws, regulations and policies with adequate safeguards must be put in place .

Ensure that the working group on services established at the Trade Ministerial in Denver includes all telecommunications services and coordinates with CITEL to take account of CITEL' s work on valueadded services.

As soon as possible, and not later than 2005, adopt new telecommunications legislation in all countries of the Western Hemisphere, allowing competition and authorizing free entry into intra-country markets .

CITEL is encouraged to: Accelerate its work in contrasting and comparing the different legal systems impacting each nation's telecommunications environment in order to understand the system's interrelationship to trade and information infrastructure issues.

As soon as possible, and not later than 2005, adopt new regulatory structures in all countries of the Western Hemisphere, separating the regulatory entity from the telecommunications operator and modifying existing regulatory frameworks to allow a smooth transition from current controlled traditional market mechanisms to open, competitive markets.

Continue collaborative effort with the International Telecommunications Union

Establish a regulatory framework capable of adjusting to technological change to 20

ensure the protection of intellectual property rights, privacy and security of information .

Trade Area of the Americas and for the achievement of social and economic progress .

Plan phased rate-rebalancing in order to evolve to cost-based rates, and seek improvement in the international settlements process.

The PrivateSectoris encouragedto: Establish a private sector working group of Western Hemisphere company representatives to develop a common regulatory framework for effective introductionof competition, which will be presented at the 1996 Ministerial Meeting to be planned by CITEL.

Review radio spectrum planning and management and current standards-setting processes in order to increase speed and responsiveness to markets, and reduce discretionary use of authority .

Acknowledge that education is the principaltool to spur development, initiate several pilot projects on distance learning and remote education, and seek support from Western Hemisphere companies.

Support a strengthened role for CITEL in fostering cooperative efforts with the ITU to ensure maximum network and equipment compatibility and interoperability.

Seek a wider base of support for the Americas Healthnet and AgriNet Americas Pilot Projects, which have been initiated by Caribbean/Latin American Action (CLAA), in collaboration with the Pan American Health Organization (PAHO), CITEL, private telecommunications and medical related companies, the Inter-American Institute for Cooperation on Agriculture, private companies, and other groups.

Participate as full members in the Negotiating Group on Basic Telecommunications Services (NGBT) in the World Trade Organization (WTO), scheduled to complete its talks on trade of basic services by April 30, 1996.

At the next meeting of trade ministers in Colombia, identify telecommunications, information services, and broadcasting as critical elements for establishing the Free

21

PanelMembers Panel One: "New Technologies Shaping the Infornation Infrastructure for Hemispheric Economic Integration 11

Panel Two: "Telecommunications Policy Regulatory Steps to Achieve Economic and Integration in the Americas 11

Ronald H. Brown Secretary of Commerce United States

Larry Irving (Moderator) Assistant Secretary for Communications and Information Department of Commerce United States

Ernst Burri (Moderator) President and CEO CODETEL Dominican Republic

Claudio Garcia Senior Corporate Vice President and Chief Financial Officer Compania de Telefonos de Chile, S.A. (CTC) Chile

Fernando Borio Secretary General TELEFONICA de Argentina Argentina

Jaime Chico Pardo Director General Telefonos de Mexico (TELMEX) Mexico

Joost van Damme Vice President TELEBRAS Brazil

Rolando Rivas Director General TELCOR Nicaragua

Maria Cristina de Mejia President CELUMOVIL de Colombia Colombia

Jorge Kunigami President Organismo Supervisor de Inversion Privada en Telecomunicaciones (OSPITEL) Peru

Maria del Rosario Medero Ranzini President ANTEL Uruguay

Jose Soriano Director General CONATEL Venezuela

David Porter Vice President for Technology and Infrastructure AT&T United States

22

SECTORAL WORKSHOP II: "MEETlNG THE ENERGY NEEDS OF THE AMERICAS"

Summaryof Discussions Theboomingdemandfor power generationcapacity,the continuousnecessityto explorenaturalresourcesin an environmentaUy-responsible manner,and the urgentneedfor enormousinvestmentsin the energysector are creatingunprecedented challengesand opportunities for cooperationbetweenall the countriesof the Americas and the private sector. Overall economic expansion,improvedservicefor energy users, and reduced government funding outlay, which are the three drivingforces behindthe restructuringof the energy sectors throughoutthe Americas, would be the prime beneficiariesof such regionalcooperation. Theprivate sector willbe the keyplayer in our integrationin termsof building,providingequipmentand services, and investing, whilethe roleof thepublicsectorwillbe thatof a catalystand a regulator. The developmentof a reliableand predictable hemisphericenergymarketwill inevitablynot only benefitlocaleconomicgrowthbut also improve hemispherictrade ties.

SUMMARYOF PANEL 1: "HEMISPHERICENERGYINTEGRATIONAND COOPERATION" "Our economies will be integrated, it is just a matter of when and how. By working together, we have the opportunity to do so with skillfulness and hope , said Bill White, Deputy Secretary of Energy of the United States.

Sustainable development concerns must be an integral part of government energy policies to preserve our natural world for future generations.

11

"This is the end of the twentieth century and the beginning of the twenty-first, said Edgar Romero

The panel focused on three key issues : resources and opportunities, benefits of liberalization, and challenges to cooperation .

Nava, President of the Federation of Chambers of Commerce and Production of Venezuela.

Resources and Opportunities

11

"The globalization of markets is allowing the mobility of technology, capital, and human resources. "

The panelists agreed that economic reform and integration are spurring the need for increasing energy sector investments, which must be met by creating a favorable investment climate.

The following are the key factors affecting the energy sector in the Americas: Increasing energy demand as economies grow;

The rate of growth of electricity in Latin American economies will be double that of the U.S., while the natural gas demand growth will be quadruple that of the U.S., over the next 15 years.

General acceptance that we are operating in an international competitive environment, and need to adapt our institutions to meet these new energy needs; and

From 1995-2005, the region will require $100 billion of project financing in the energy sector, including $25-50 billion for pipelines.

The private sector will be the key to meeting these capital demands.

23

which faced neither commercial nor politic .

1 and were subsidized. risks

Growing competition among energy suppliers will lower energy prices or reduce the rate of increase ; that money can be channeled to other sectors.

Economic development: private . sector energy firms oft en actively engage the commuruues to spur economic develop . . ment attracting new m ustnes an JO opportunities '

To be successful, international energy firms must develop business alliances with local partners.

s.

Challenges to Energy Integration The number of trans-boundary gas pipelines is likely to increase, particularly in the southern part of the continent, bringing together markets and supplies; due to technical differences among countries, trans-boundary electric grids will not grow as rapidly as the gas network.

_ A need exists for political will: The establishment of the regulatory frameworks is not sufficient to guarantee succes sful integration¡ rather the political will , involvement , and active participation of the government must exist.

A need exists for currenc y stability underpinned by a predictable , stable monetary system and fiscal balance .

A more stable monetary environment would reduce risk, thereby allowing investors to accept a lower return on investment. This would ultimately result in lower energy prices.

Demand for financing energy infrastructure projects is greater than the ability to provide financing . There is a trend to welcome the private sector to compete.

Competition between the private sector and the national energy provider will develop better, more efficient projects .

Equal, transparent and consistent treatment for domestic and foreign investors , across state and across national boundaries , should be a hemispheric goal.

The legal framework must provide adequate contractual protection against future legal and regulatory changes .

The public sector should focus its efforts on creating a stable framework for the financial and regulatory structures in order to attract private capital, while at the same time respecting Hemispheric sustainable development.

Benefits of Participation

Liberalization/Private

Governments may need to encourage progress when market forces are inadequate (such as evaluating competing projects (e.g., hydroelectric versus thermal projects ) to determine which project best serves the public and addresses environmental concerns; or by granting the right of eminent domain to enable development to proceed in the public interest.

Sector

Capital reductions : with private capital inflows, the capital expenditure required by governments will be reduced, freeing funds for other sectors of society.

During the discussion period, the Private Sector Advisory Committee (COECE) Energy Group of Mexico presented a position paper stating that some governments may wish to regulate the exploitation of non-renewable energy sources to COECE maximize the societal benefits. underlined the need for balance between patrimony control and economic development when considering private sector participation in the energy sector.

Aiming at the smaller and

Experience shows that increased competition often lowers electricity rates or reduces the amount of rate increases. However , electricity rates could also rise in certain countries since private operators replace state-owned utilities

24

developing economies, the Dominican private sector submitted recommendations both to consolidate the regulatory framework promoting

faster administrative processes and efficient and equitable development and to open the energy sector to private investment.

SUMMARYOF PANEL 2: "CHALLENGESTO ENERGYAND MININGINTEGRATION"

The two key challenges to hemisphericenergy integration--the needfor capitaland the demand for betterservices-- may be resolved by private investmentand greater competition. The overall challengeis establishingregulatoryandfinancial frameworksto attract scarce capitalresourcesto developenvironmentally sustainableprivate energy projects.

and higher tariffs may be required to reduce that risk, impairing the economic viability of the project.

To reduce the risk to the suppliers of capital, there needs to be a stable , transparent and effective regulatory framework . In addition, to reduce risks (political, regulatory , credit) , there are a number of complex transactions being undertaken. However, these are lengthy, costly processes. The multilateral institutions are looking into the concept of "wholesale risk reduction" which may take the form of a multilateral investment agreement.

FinancialChallenges: To find ways to raise capital at reasonable cost, consistent with long-term development needs and goals. Despite the massive need for energy infrastructure,there are very few projects actually in development. The challenge is to attract and keep globally scarce capital in the region.

Capital must be available on a long-term basis. The multilateral lending institutions have a comparative advantage because they provide technical assistance and leverage and enhance market activities.

There is a need for fully developed (completed)domestic capital markets. Long-term capital exists mostly in the form of foreign exchange, while project revenues are generated in local currencies, creating risk for Latin American countries. A key to reduce this risk is local capital market development, the most important element of which is pension reform .

There is a greater amount of equity capital than of debt capital available to finance these projects. Equity capital investments are high risk,

Domestic insurance markets need to be developed to address the needs of project finance, particularly to cover intra-regional investments .

Recommendations Governments must create a stable regulatory environment for the energy sector that facilitatesinvestments and that is consistent among both states and nations;

Governments are encouraged to consider the followingrecommendations.We hope thesewill be furtheraddressedat the upcoming "Hemispheric SustainableEnergySymposium",October2-4, in Washington, D. C. It was recognizedthat:

Governments should foster policies that are conducive to the existence of a competitive and transparent energy sector;

Governments need to assure monetary stability, if objectives for private investment in infrastructure are to be met;

Where countries chose to retain national energy companies, to examine the complex issues

25

related to participation of state-owned companies along with private ones in a competitive, transparent market¡ '

To pursue the development 0 f ¡ mvestment treaties to reapportion risksmultilateral ateral developers and improve the efficiencyfor Project transactions; ncy of Project

To encourage governments to emphasize demand-side management, including energy efficiency, in order to reduce the amount of additional capacity needed;

To proz:note information exchange all paruc1pants in the domestic energy among sector; To create a hemispheric forum .. .

OfUtility regu atory commissions to discuss technical economic, an po icy issues. , l

To promote the parallel development of capital markets and the opening of the energy sector to private sector participation, through pension and insurance reform among other measures; To facilitate hemispheric through regional grids and pipelines;

To encourage the establishment of regulatory research centers to disseminate rese . . . arch on re gulatory issues pertammg to the energy sector.

integration

To encourage universities to include the public utility field in the curricula for technical economic, legal, and public policy studies. '

To encourage multilateral development banks to develop alternative financial instruments to support private infrastructure projects;

26

Panel Members panel One: "HemisphericEnergy Integration and Cooperation"

Panel Two: "Challengesto Energy Integration" Ambassador Paul Boeker (Moderator) President Institute of the Americas United States

The Honorable William White (Moderator) Deputy Secretary of Energy Department of Energy United States

Peter Greiner Secretary of Energy Brazil

Stephen Chesebro' President and CEO Tenneco Gas United States

Raul Garcia President Regulator Nacional del Gas Argentina

Raul A. Aguero Deputy Secretary for Fuel Ministry of Energy Argentina

Douglas Jones Director National Regulatory Research Institute United States

James Bannantine Principal Enron Development Corp.

United States

Patricio Perkins Director, Yacimientos Petroliferas Fiscales (YPF) and Country Director, Oppenheimer Argentina

Thomas Boren President and CEO Southern Electric International United States

Antonio Vives Division Chief, Infrastructure and Financial Markets InterAmerican Development Bank

Edgar Romero Nava President FedeCamaras Venezuela

27

SECTORALWORKSHOPIII: "TRANSPORTATION: MOVINGTHE HEMISPHERETOGETHER"

Summaryof Discussions Panelists and members of the audiencediscussedthe benefitsfrom greater integrationof and cooperation relatmg to the hemisphere's transportationsystem. They saw substantzalbenefits accruingto the region's economies from improved and integratedtransportationinfrastructure,more open, Lessregulatedtrade harmonized technicaland operatingprocedures,and the increaseduse of modem technologies. ' SUMMARYOF PANELJ: "TRANSPORTATION SERVICES BRING THEHEMISPHERETOGETHER" systems are among the greatest barriers to increased international trade.

Panelists discussed how improved transportation services are vital to the economic development and trade in the hemisphere. It was noted how all countries of the hemisphere regulate transportation to some extent; however, a few nations in the 1960' s undertook to begin to deregulate their transportation systems and other nations have followed this path in the succeeding decades.

Many other countries are now contemplating deregulating and privatizing transportation, but reform is not universal. Many challenges remain.

There continue to be domestic and crossborder restrictions, limits on the use of foreign and private capital, and differing approaches to regulation of safety and security .

In many countries,

restrictions on foreign investment in domestic transportation companies limit the capital available to improve services are a barrier to the creation of strategic alliances among carriers to exploit domestic and international markets, and inhibit the development of international intermodal through service .

Berriochoa, President, Transportes Inter- Mex stressed the importance of harmonizing transportation among the nations over time, through the exchange of e periences, and with mutual support from all our people. He noted that we are on the right track, but hould use caution.

We should not confuse dome tic experience with international needs .

There was broad agreement that the nations of the hemisphere should explore how they can work together to eliminate or reduce barriers to efficient transportation, reduce unnecessary rules and regulations, and cooperate in implementing new technologies. Industry and governments should also examine what steps can be taken to cooperate with each other to provide better, safer, and more efficient transportation services across borders .

International transportation, he noted, requires its own rules distinct from, yet in harmony with, domestic rules . International rules should respect domestic customs and differences. There is a need for investing in infrastructure, equipment technology and development, the means . of production, and training--all of which will bring jobs and security, thus, reducing migration.

In his introductory remarks, U.S. Secretary of Transportation PeĂąa the panel moderator, stated that the stakes in achieving improved commercial integration and free trade and the benefits that they can bring to the people of the hemisphere are enormous, but trade cannot increase and economies cannot grow unless people and goods are moved efficiently. Inefficient transportation

Emmett, President, National Ind~str~ Transportation League noted that in discussionsabout transportation policy it is vitalto keep two principles in mind. First, transportation only exists to serve customers and second

28

transportation is an arena of constant change with new technologies and innovative business approaches . Shippers need to have efficient, reliable transportation in order to move their goods to market and as more and more shippers conduct business in different countries, uniformity becomes very important.

Driscoll, President, National Air Carrier Association, stated that a sound, well developed transportation system is essential to the economic development of this hemisphere , as well as the global economic system, noting that market forces must govern the development, not government regulation. He stated that the scheduled and charter services offered by airlines in their cargo and passenger operations are most conducive to recently developed concepts of just-in-time delivery and point-to-point through services. He supported the governments of the hemisphere making decisions that looked to the future, and adopting principles resulting in an exchange of rights which, although time-phased , would in the end, result in an open skies agreement.

He recommended that the recently concluded U.S.Canada bilateral could serve as a model on which similar arrangements with other hemispheric countries could be reached .

He observed that anytime economic regulations differ from one jurisdiction to the next, there is the potential for delays, higher costs, and logistical nightmares . Uniformity can be achieved in two ways: governmentally established rules or reliance on the free-market system to establish shipper/carrier relationships . Shippers cannot imagine a "one world" government dictating transportation regulations. Only free markets provide a workable solution.

Viveros, CEO, Tecomar, noted the vital contribution of transportation to trade and the necessity to eliminate barriers and reduce regulation. He supported the modernization of the rules and regulations governing transportation in a multilateral framework and proposed the establishment of a working group to exchange information on the region's transportation systems and services, to include regulatory regimes, traffic data, and operating requirements. The private sector could then make recommendations to governments on steps that would eliminate barriers and increase competition. He also proposed efforts be undertaken to build the Maritime System of the Americas.

During the discussion period following the panel presentations, suggestions were made about the need for uniform law and practices , including a uniform bill of lading, uniform insurance documentation, expedited port clearances, harmonizationof customs and port procedures, use of IMO standards carriage of oil , use of electronic data interchange, prenotification of cargo on board arriving vessels, uniform weight and size standards for trucks and containers, an integrated land transportation system in South America and a uniform maritime system for the Americas.

SUMMARY OF PANEL 2: "BUILDINGTRANSPORTATION INFRASTRUCTURE FOR THEHEMISPHERE"

Seijas,Chairman, Latin American Delegation to the American Association of Port Authorities and the moderator of the panel, in his opening remarks,said that in the past states have played a

changing too. Its role, as the owner and operator of facilities is declining , while its role as a facilitator in bringing the private sector into the process is growing . Governments, as well as the private sector, are seeking greater efficiency and new competitive opportunities. Many countries are now seeing bothone another and the private sector as allies, not solely as competitors, and are

prominent role in the development of national infrastructure.

The strain on transportation facilities is enormous and governments can no longer meet all the needs for the movement of rapidlygrowing trade. The role of government is

29

b

.. begining to work together to solve the problems a nd to build the necessary infrastructure .

United States) of privatization to develop Op their transport infrastructure.

Gonzalez , President of Airways Engineering .

Corporation Group , indicated that the demand . are growmg . b eyond governments n for airport facilities .....

All of the panelists stressed that one of the crucial needs for development of facilities is funding. As Governments, international organizations and international lending facilities are meeting less of the need, private sources of capital are being sought. Innovative funding is being developed in the private sector to meet some of these needs; however, several speakers noted that more funding 1s needed and that public policy changes may be necessary to create an environment conducive to private investment.

ability to meet the need. The concept of airports development needs to b e repackaged to c create other revenue generators, such as shop . . . . . shopp concessions, to raw m private mvestors.

Silvestrin, Director Executivo of ADTP/Agencia de Desenvolvimento Tiete Parana , described the development occurring in the Tiete Parana region of Brazil , an area with 100 million people at the center of the Mercosur . There are $ 50 billion in basic infrastructure projects scheduled for the region, in the next five years, all to be done by the private sector.

Rannik, President and CEO of the B&R Group, after noting the tremendous growth in trade and the strain it was placing on facilities, stated there are two ways to grow--expand facilities and become more efficient. Both require lots of money for new or improved terminals and equipment, as well as the development and implementation of electronic data interchange, more efficient inspection procedures, and better interface and cooperation among shippers, carriers, governments, port operators, and other modes of transport, particularly in the intermodal chain.

Vivacqua, Diretor of Consorcio Operacional do Corredor Centroleste , noting that transportation is the lubricant for development, described the Center-East Corridor as an instrument of economic development for South America. It is a network of railroads joining together various regions of Brazil and providing links to ports and to other South American countries.

Wolff, President & CEO of Louis Berger International, summarized the current situation as one with inefficient railroads and ports, underinvestment in mass transit, underuse of waterways, and underdeveloped intermodal facilities and interregional links. He noted the need for long term planning by governments with private sector involvement, profits and stability of exchange rates that are essential to attract private investment, and the use by some countries (Mexico, Chile, Canada, Argentina, and the

During the discussion period that followed the panelist presentations it was suggested that the Inter-American Development Bank and the World Bank provide funding for infrastructure development and that collateral development near airports could make investment in them more attractive. It was also noted that Argentina ha significantly deregulated its railroads and ports with dramatic results--less labor , lower cost, and greater speed.

Recommendations Support and encourage the convening and work of the proposed Hemispheric Transportation Ministerial Meeting, which would develop further the concepts

articulated at this workshop and the October 1994 Tampa pre-Summit Transportation Conference.

Continued

30

senior level involvement in cooperative effortsis required to ensure their success.

borders by streamlining and harmonizing customs, inspection, and clearance procedureswherever possible and through the introductionof new technologies, such as electronic data interchange, and the eliminationof unnecessary requirements.

Governments should keep the economic regulation of transportation and related services to the minimum necessary to meet public policy objectives, and should rely to the maximum extent possible on market forces to determine the mix of services and prices to be offered. It was suggested that multilateral initiatives shouldbe launched to liberalize all modes of transportservices,especiallyopen skies for air services.

Encouragethe exchangeof information on the region's transportation systems and services, including regulatory regimes, traffic data, and operating requirements.

Encourage the exchange of information between firms so the private sector can develop the most efficient ways to transport goods and people.

Adopt, as a minimwn, international standards for safety and environment in the construction of transportation infrastructure and equipment, and for operations in all modes of transport, ensuring minimum costs to communities.

Encourage governments to work with internationalfinancial organizations, such as the World Bank, the Inter-American Development Bank (IDB), and the InternationalFinance Corporation (IFC), and private financing groups to develop innovativeways to finance infrastructure projects vital to the hemisphere's transportation system, such as ports, airports, highways, railroads and interrnodalinterchangefacilities.

Governments of the hemisphere should jointlyexploreways to reduce unnecessary rules and regulations, and barriers that impede cooperation among transportation firms of different countries and entry to transport markets.

Examine alternatives for governments and/or the private sector to provide safeguards for long-term private investmentsin infrastructure concessions.

Raise governments' awareness of the commercial costs of theft, armed boardings, and hijacking and encourage them to support private sector efforts and to become involved in hemispheric and international efforts to improve transportation security.

Encourage the harmonization of surface transportationlaw with regard to liability for loss of or damage to goods and third parties through the development and use of a uniform truck bill of lading.

Encourage governments to join international efforts to facilitate the movement of goods and people across

31

Panel Members Panel 1: "Transportation Services Bringing the Hemisphere Together"

Panel2: "Building Transportation Infrastructure for the Hemisphere"

Federico Pnnea(Moderator) Secretary of Transportation United States

Humberto Seijas (Moderator) Chairman Latin American Delegation to the American Association of Port Authorities Venezuela

Guillermo Berriochoa President Transportes Inter-M EX Mexico

Derish Wolff President & CEO Louis Berger International United States

Edward Emmett President National Industr ial Tra nsportation League United State s

Jaak Rannik President and CEO B&R Group Dominican Republic

Carlos Vivero s CEO Tecom ar S.A. ¡ Mexico

Jorge Gonzalez President Airways Engineering Corporation Group United States

Edward Driscoll President National Air Carrier Association United States

Carlos Roberto Silvestrin Director Executivo ADTP/Agencia de Desenvolvimento Tiete Parana Brazil Paulo Augusto V ivacqua President Consortium of the Center-East Corridor Brazil

32

SECTORALWORKSHOPIV: "AGRIBUSINESSIN THE FREE TRADEAREA OF THE AMERICAS"

Summaryof Discussions Workshop participantssaw many opportunitiesfor gains to the entire hemispherefrom greater commercial integrationThe UruguayRoundagreement,whichbringsagriculturaltradeunder worldtrade disciplinesfor thefirsttime,fonns a soundfoundationfor thisintegration.Nonetheless,workshopparticipantsidentifiedmany importantissuesthat trade negotiatorsmust resolvebefore integrationcan becomea reality. Because of the complexityof many of these issues, and the importanceof agriculture,participants supported giving agriculturalissuespriority in negotiationsleadingto the creationof the Free TradeArea of the Americas (FTAA).

Benefitsfrom Hemispheric Integration

For the first time, GATI has brought agriculrural trade under world trade disciplines. This forms a solid foundation for further integration under the FTAA. Both NAFTA and Uruguay Round negotiations have shown that a strong agreement in agriculture is an important component of an overall trade agreement. But the complexity of agricultural issues will present challenges to trade negotiators .

Benefits fromgreater commercial integration were apparent to workshop participants. As one panelist put it, "The benefits of a hemispheric free trade area are uncontested . Different countries are productivein different crops , and different countriesmayharvest similar crops at different times.

Thisleads to opportunities for gains from trade.

Manycompanies,including some represented in the workshop,are well on the way to a hemisphericbusinessstrategy.

11

Participants supported giving agricultural issues priority in negotiations leading to the creation of AA. Governments should approach agriculthe FTAA tural negotiations with a "sense of urgency, determined to resolve these issues early in the tenyear process, not at the end. In the meantime, there was strong support for rapid implementation of all Uruguay Round requirements, including market access, subsidies, sanitary and phytosanitary provisions.

Workshop participants identified substantial market oppornmities as population increases in the hemisphere,particularly as incomes rise and nutritional levelsimprove.There is also great potential for a strongerandmore efficient Western Hemisphere agribusinessindustry in other markets. The hemisphere has 14 percent of the world's populationyet produces25 percent of the world's food.

11

Regulatoryand Policy Issues A sidebenefitof greater integration could be the

convergence of currently-existing trade agreements amongcountriesin the hemisphere . These agreementscan impose duplicative or conflicting requirements on agribusiness enterprises and government agencies. A useful first step would be a survey of existingagreements on agriculture in the hemisphere, to assess the need for harmonization or convergenceof such agreements under the FfAA.

Workshop participants identified many critical issues needing resolution, although all did not necessarily agree on the details of how these issues ought to be resolved . Fora in which these issues could be addressed, and solutions worked out, include the following: Working groups established by the Western Hemisphere Trade Ministerial, June 29-30, 1995.

33

protect health and safety. Participants su faithimp1ementat10nof Uruguaysupported rapid good-1a1 R Deputy Under secretary requirements. the commitment of the US Scbroederreaffirmed Department of Agriculture to implement transparent, science-based rules.

Meetings of the Inter-American Board of Agriculture (IABA).

Ministers of Agriculture will meet as the Board in September, 1995 in Costa Rica.

Second Annual Hemispheric Conference on Agribusiness in the Americas, Miami, December 4-6, 1995.

Several participants identified steps that countries if 1es could take to promote trade, even 1 their measu . .

Differemt . res were not 1dent1cal. Iuerent countries' measur could be formally recognized as equivalent for trade purposes.

Specific regions could he established and maintained as pest-free or disease free zones, as is now done in parts of the United States and Mexico. Procedures for determining which products from a particular country may be imported could be streamlined.

Customs/Trade/Finance: Symposium of the Americas, Miami, February 25-27, 1996.

Private Sector Tnnut , Participants agreed on the need for private-sector involvement in FT AA discussions.

Although meetings such as the Hemispheric Trade Forum can be very valuable, they suffer from lack of continuity. There is no ongoing formal mechanism for hemisphere-wide private-sector input to the Working Groups and other negotiations.

The workshop also identified issues related to enforcement of measures.

Quarantine and inspection delays are a problem, especially for perishables. Country-of-origin inspections were suggested as a solution. The need for control of contraband traffic in illegal drugs was acknowledged, but inspections related to drug control are often costly and disruptive.

Sanitary and PhytosanitaryMeasures Sanitary and phytosanitary measures protect plant, animal and human health and safety, yet they can also be trade barriers. The Uruguay Round agreement reaffirms the right of each country to adopt the health and safety measures that it deems to be appropriate, but it encourages the use of international standards and requires measures to be based on scientific principles and supported by sound scientific evidence. It also provides that a country should accept another country's measures when they are demonstrated to be equivalent to its own measures and encourages establishment and maintenance of pest-free or disease -free zones.

Finally, participants emphasized the need for effective institutions for resolving disputes fairly and quickly. Such institutions would not be limited to sanitary and phytosanitary measures, but they would be especially valuable here.

Several participants gave examples of trade-related regulatory disputes that were not resolved fairly or quickly, or which are still unresolved.

Subsidiesand Other Market interventions Domestic policies that support agricultural producers can have significant trade effects. Many countries, both industrialized and developmg, maintain such policies.

Examples include, in addition to export and domestic subsidies, such policies as marketing orders, production quotas, and import restrictions. Participants spoke against export subsidies and other subsidies and market interventions that distort trade.

Workshop participants cited the lack of harmonization of measures in the hemisphere.

Participants also identified examples of measures that were barriers to trade, but seemed to have little or no justification. Several participants called for the elimination of sanitary and phytosanitary measures that function as trade barriers. Others pointed to the need for standards and regulation to

34

Tariffsnnd Quotas

distribute timely, comprehensive agricultural market information throughout the hemisphere.

Agrinet-Americas, under the auspices of Caribbean-LatinAmerica Action and the InterAmericanInstitutefor Cooperationon Agriculture, is sponsoringinnovativeuses of telecommunications for agriculturalmarket and trade facilitation information.

The Uruguay Round agreement converts most agriculturalimport quotas into tariffs. Developed countrieswill reduce their tariffs an average of 36 percent by the year 2000 and all countries have boundtheir tariffs. The FTAA would lead to the immediate or phased elimination of all tariffs among the participating countries. Nevertheless a number of issues need to be addressed in this area. Countries must agree on timetables for the elimination of tariffs. Rules of origin must be specified,so that market access benefits go only to participating countries. Customs valuation rules and product classification issues need to be addressed.

Environmental Protection Issuesrelatedto protectionof the environment and sustainable agriculture were also mentioned.

Several participantsspoke of the need to protect the environment. While not opposed to environmental protection, some workshop participants expressed concern that trade negotiators might pressurecountriesto adopt regulations inappropriate to their stage of development.

ProductStandards Differingproduct standards can also impede trade.

The workshop identified two areas needing attention. First, food product labeling regulationscan differ greatly from country to country. Greater uniformity could help trade while still serving health, safety and consumer information goals.

Second, harmonized agricultural product grades and standards would be of great benefit to trade.

Other Policyand RegulatoryIssues The workshop recognized that non-agricultural policies can also affect agricultural trade. Such policiesinclude: Soundmacroeconomicpolicies leading to economic stability and a predictable framework for improving trade;

SmallerEconomies Someconcern was expressed about issues specific to smaller economies in the hemisphere. For example, many countries now enjoy preferential access to the United States market under CBI or GSP. A more generalized lowering of trade barriers might disadvantage such countries, and some participants saw a need for special transitional measures. Other examples include the possibilityof a longer phase-in for smaller economiesor special financial aid to help them adjust to free trade in agriculture.

Deregulation, privatization and other economicreformsto improvecompetitiveness, through greater productivity and economicefficiency;

Communications and MarketTnformation

Issuesof technologytransfer and intellectual property rights;

U.S. Secretary of Commerce Ronald Brown, addressing a Forum plenary session, spoke to the issue of using telecommunications technology to

Administration of trade laws, such as antidumpingand countervailingduty laws.

Improvementsin transportationinfrastructure, to improve productivity and lower costs; Maritimeregulationsand cartels that raise transport costs;

35

Recommendations Harmonization of measures to . . . ' o reduce trade unpedunents while protecting man, animal and plant health and hu.. safety Forma 1 recogrut10n of equivalent ¡ sures. mea.

Workshop participants identified a number of critical issues needing resolution, although all did not necessarily agree on the details of how these issues ought to be resolved. The issues should be addressed in one or more of the Working Groups established by the Western Hemisphere Trade Ministerial, as well as in other fora.

Elimination of sanitary and phytosanitary measures that function as trade . . . barriers but have no sc1ent1 1cJustification.

Improvements in transparency of meaea. sures and in enforcement mechanisms.

Quarantine and inspection delays _ improvements m procedures, especially for perishables.

Reformed and streamlined approval procedures for adding new products for permissible import.

Establishment and maintenance of mutually-recognized pest or disease-free zones.

Specific recommendations include the following: Agricultural issues should be given priority in negotiations leading to the creation of the Free Trade Area of the Americas (FTAA). Governments should try to resolve these issues early in the ten-year process, rather than wait until the end.

All countries in the hemisphere should move rapidly to implement all Uruguay Round agricultural trade requirements, including those related to market access, subsidies, and sanitary and phytosanitary measures .

The following issues should be addressed by the Working Group on Subsidies, Anti-Dumping and Countervailing Duties: Appropriate discip lines on assistance to low-productivity agriculture.

Reduction or elimination of export subsidies and other trade-distorting subsidies and market interventions.

Improvements in the administration of antidumping and countervailing duty laws.

Further discussions of agricultural issues, and the development of appropriate solutions, should take place in other fora, including the following: Working groups established by the Western Hemisphere Trade Ministerial, June 29-30, 1995.

Meetings of the Inter-American Board of Agriculture (IABA). Ministers of Agriculture will meet as the Board in September, 1995 in Costa Rica.

Second Annual Hemispheric Conference on Agribusiness in the Americas, Miami, December 4-6, 1995.

Customs/Trade/Finance: Symposium of the Americas, Miami, February 25-27, 1996.

The following issues should be addressed by the Working Group on Standards and Technical Barriers to Trade : Harmonization of food product labeling regulations.

Harmonization of agricultural product grades and standards .

The following issue should be addressed by the Working Group on Market Access: - Phasing out of tariffs and other market access barriers.

The following issues should be addressed by the Working Group on Sanitary and Phytosanitary Measures:

36

_ The followingissues should be addressed by the WorkingGroup on Customs Procedures andRulesof Origin: Making drug-related inspections less disruptiveto legitimate trade, especially

phytosanitary measures, market ing orders , and other agricultural policies .

Environmental and sustainable agricultural issues.

for perishables.

Rulesof origin and product classification.

Hemisphere-wide mechani sms should be established for private -sector input to the deliberations of the Working Groups and other negotiations leading to the creation of the FTAA.

The following issues should be addressed by theWorkingGroup on Smaller Economies: Maintenance of access to U .S. and other

markets now enjoyed on a preferential basis by many smaller countries , e.g., underCBI or GSP .

Possible adjustment assistance or special

Each country in the hemisphere should adopt appropriate economic policies that will support hemispheric integration, including the following: Sound macroeconomic polic ies leading to economic stability and a predict able framework for improving trade .

Deregulation , privatization and other economic reforms to improve compet itiveness, through greater productivity and economic efficiency.

Improvements in transportation infr astruc ture, and reform of domestic and international transportation regulation , to improve productivity and lower costs.

transitional provisions for smaller econo-

mies.

The following issues should be addressed in connection with Agrinet-Americas: Lack of continuity and cross-country communication for private sector input into commercial integration negotiations; need for institutionalization of hemispheric-wide private-sector advice.

Lack of timely, comprehensive agricultural market information that is readily available to small and medium-size agribusiness enterprises in the Western Hemisphere.

The move toward greater integration should be accompanied by a convergence of existing trade agreements, which can impose duplic ative or conflicting requirements on agribusi ness enterprises and government agencies . A useful first step would be a survey of these agreements on agriculture in the hemisphere , to assess the need for harmoni zation or convergence under the FTAA .

Appropriate negotiating fora should be identified to address the following agricultural

issues: Dispute resolution mechanisms that would coverconflicts arising out of sanitary and

37

PanelMembers Panel One: "MarketOpportunitiesand Challenges"

PanelTwo: "Regulatoryand PolicyIssues" Carlos E. AquinoGonzalez (Moderator) Director General Inter-AmericanInstitutefor Cooperationon Agriculture

The Honorable James Schroeder (Moderator) Deputy Under Secretary for Farm and Foreign Agricultural Services U.S. Department of Agriculture

G. AllenAndreas Counselto the ExecutiveCommittee Archer DanielsMidlandCompany Decatur, Illinois, U.S.A.

Salvador Carbo Board of Directors Bunge and Born Buenos Aires, Argentina

MarceloAvogadro UnderSecretary, InternationalTrade Relations Ministryof Foreign Affairs BuenosAires, Argentina

Luis Fernando Furlan Chairman of the Board Sadia Concordia S.A. Industriae Comercio Sao Paulo, Brazil

RonaldBown President ChileanExportersAssociation Santiago,Chile

Phillip Seng President and CEO U.S. Meat Export Federation Denver, Colorado, U.S.A.

His ExcellencyPablo Pereira Ministerof Economyand Development Managua,Nicaragua

John Werner

President and CEO, Heinz-Venezuela Area Director for Latin America Caracas, Venezuela

38

SECTORALWORKSHOPV: "TOURISM:EXPANDINGCOMMERCIALHORIZONS"

Summary of Discussions thesectoralworkshop'soverall goal was to addresscommercialintegrationfor this industry. It was divided intotwopanels,thefirst targeted to identifyand discussimpedimentsto expandingtraveland tourism-related for tourismpromotionand the overall tradeandinvestment.The secondpanelfocusedon the use of technology developmentof nationaltourismpolicies to encouragingand expandingprivatesectorinvestment.

SUMMARY OF PANEL 1: "EXAMININGCOMMERCIALINTEGRATIONOF TOURISMSERVICES"

Thepanel was moderated by Carlos Asensio,

development of trade and investment in the travel and tourism industry among the hemispheric countries:

President, Aerorepresentaciones Consultores Asensio also Jnternacionales from Argentina. presented the private sector recommendations at thefinal plenary session of the Forum. The first panelist, Minister Lilliana Canale Novella, the Ministerof Industry, Tourism, Integration and International Trade Negotiations of Peru, established the overall framework for regulatory considerationfor services, specifically tourism, in the expansion of the Free Trade Area of the Americas(FTAA). She recognized the enormous economic contribution that travel and tourism makes to the gross domestic product of all countries in the Hemisphere. She encouraged the advancement of national treatment and nondiscriminatory principles to facilitate the continuation of the hemispheric growth of this industry. This includes the protection for logos, trademarks, workforce personnel selection and profits garnered.

She encouraged common standards for the quality of contractual commitments. She particularly encourage~ the need for analysis of the size and volume ofintrahemispheric trade on travel and tounsm for financial agencies to support investment in these services.

Alfonso Mujica, President, National Chamber of Commerceof Chile recognized that tourism is ' . . I the gateway to a wide spectrum of international trade and investment. He identified six areas that governments may examine in encouraging the

39

1.

Create a positiveclimate for private sector investmentin tourism and tourism-related businesses by eliminating restrictions to investmentsin tourism businesses, such as the double taxation policies which inhibit profitability and, thus, deter foreign commercial expansion;

2.

Establish open skies to encourage relaxed movements of travelers throughout the hemisphere;

3.

Return value-added(domestic) taxes to the travelers in a simplified manner to encourage the expansion of retail services throughout the hemisphere;

4.

Raise the level of tourism representation within the government structures to a Ministerial/CabinetSecretary level so that tourism is equally represented in national policies and actions which affect tourism flows, such as customs and immigration procedures;

5.

Reduce bureaucracy and paperwork for tourist immigration and customs processing; and

6.

Encourage joint airline traffic programs for more efficient flows of travelers and encourage the privatization of airports to reduce costs to the traveler, such as the departure fees.

Michael Halle, Executive Producer of Tourism Technology at Virtual Warehouse in Canada, offered major issues for consideration in hemispheric commercial integration of travel and tourism: 1.

Modernization of the tourism product, concentrating on education and training of people first, and sustainable development second;

2.

Recognition of the importance that culturalization plays as the core reason for travel and opportunity for economic development, as unique products;

3.

Encouragement system;

4.

Make tourism a national priority and emphasize that the private sector has the responsibility to drive policy;

5.

Enhance competition through differentiation of product not commodity pricing ; and

6.

Adopt national commitments to succeed . . f . with the expansion o foreign investment . and economic eve 1opment using tourism as a generator.

Following the presentations, discussions were highly supportive and expansive of the panelists: considerations.

Strong recognition of the economic power of the travel and tourism industry was underscored by the encouragement of governments to make travel and tourism a strategic and economic development priority . Emphasis and resources need to be made for education and training in the industry . Most of all, all of the participants supported the premise that sustainable development, that is preservation and protection of the natural and cultural resources, is integral to the continuation as well as expansion of the tourism industry throughout the hemisphere.

Another major aspect for expansion of tourism is a public/private partnership for a consumer protection system for the safety and security of the traveler. Overall , it was considered that the role of government is to provide open spaces for the private sector to creatively develop, without the inhibiting effects of regulations .

of a free enterprise

SUMMARY OF PANEL 2: "OPPORTUNITIES FOR INVESTMENTAND PROMOTION OF TOURISM-RELATEDBUSINESS11 Caio Luiz de Carvalho, President of the Brazlian Tourist Agency, was the moderator for

supported the need for a national tourism policy for each country to facilitate the federal importance of tourism and linkages throughout the hemisphere.

He encouraged unification of the industry at local and national levels before successful hemispheric policies can be enacted.

this panel. He encouraged governments to see tourism as a social and economic factor in their well-being. It should be viewed as the instrument of redemption for harsh economic conditions.

Education of government officials is essential.

Harmonization throughout the hemisphere can better be accomplished by raising the status of tourism to the Ministerial level and filling the position with a tourism professional.

Luis Dodero, Vice President and General Counsel, Multilateral Investment Guarantee Agency (MIGA), from the World Bank Group, addressed the harmonization of regulatory frameworks for investment by recommending the guidelines already established by MIGA. There 15 no need to reinvent the wheel but MIGAwould '

Merrett Stierheim, President of the Greater Miami Convention and Visitors Bureau,

40

help facilitate this by serving as the catalyst for such a venture. He also encouraged countries to negotiatebilateral treaties among themselves on the protection of foreign investment.

Tourism Organization (UN/WTO) .

He encouraged that strategic marketing plans be adopted and that modern information technology be utilized.

Argentina implemented a strategic marketing plan in 1992 which has been successful to date. Minister Mayorga recommended that countries throughout the America s adopt a framework for an integrated tourism product, aligned on regional and national destination bases.

He also recommended that positive actions be encouraged on a hemispheric level to ensure that modern information technology be used by both tourism providers and consumers .

Adnan Hassan, Global Manager, Investment Promotion Agency Network at MIGA, demonstrated the promotion potential for hemispheric tourism through technology.

He encouraged the participants to actively engage in joining the technology revolution, lest the industry be left behind. He encouraged the countries to provide an industry liaison for facilitating the move to technologically to communicate the investment potential and opportunities of the industry.

Conclusions

MinisterFrancisco Alberto Mayorga, Secretary of Tourism of Argentina, reemphasized that effectiveplanning and tourism policy issues require coordinated decision-making, since tourism cuts across many issues under the review of other governmental agencies such as transportation, environmental concerns, training and human resource development. He also pointed out that, tourism requires a ministerial level recognition withinthe government structure in order to achieve efficient policy coordination, as indicated in both the Declaration of Orlando from the Western Hemispheric Tourism Ministerial and the Declaration of Buenos Aires during the Executive Council meeting of the United Nations/World

Overall, the participants of the tourism workshop were strong in stating the importance of the social and economic contributions and the developmental role that tourism plays throughout the hemisphere .

Successful harmonization and commercial integration is dependent upon changes in governmental policies which address national and non-discriminatorytreatment, a relaxed investment environment, and the encouragement of open skies. Harmonization can be achieved more readily if governments commit to raising the position of tourism in their structures to a Ministerial/Cabinet Secretary level and commit to a national tourism policy as part of their national economic development strategies .

Recommendations That the participating countries of The Hemispheric Trade and Commerce Forum elevate their national tourism authorities to the highest level within their governments, as reflected in the Declaration of Orlando from the Hemispheric Tourism Ministerial and The Declaration of Buenos Aires during the Executive Council Meeting of the United Nations/World Tourism Organization (UN/WTO).

Political/EconomicImportance That all governments should recognize that the travel and tourism industry is a very strong, and, in some countries, the most important tool for providing employment, export growth and regional and national economic development through foreign investment and trade.

Presidents should give priority to travel and tourism within the government's international trade policy and planning.

41

That the countries from the Hemisphere should make an effort for harmonizing • their 1ore1gn mvestment legislation. :the Guidelines an the Treatment of Direct Investment developed by the world Bank Group should serve as the basi . s 1or this undertaking .

Given the instrumental role of the U.S. Travel and Tourism Administration (USTT A) as the primary coordinator for the hemispheric tourism facilities, and given the negative repercussions that could occur at this particular time in the hemispheric negotiation process, we hereby request on behalf of all private sector tourism representatives that the Secretary of Commerce do whatever possible within his reach to keep the office of the USTT A funded, as it is instrumental in furthering commercial integration in the travel and tourism industry throughout the Americas.

That countries negotiate bilateral treaties among themselves on the protec tion of foreign investment and avoidance of double taxation.

Elimination of Barriers /Facilitation That tariff and non-ta r iff barriers which directly or indirec tly prevent the circulation of tourism-related goods and services be eliminated , including restrictions on promotional and exhibition materials.

That to ensure continual tourism growth and development, governments must preserve and protect the natural and cultural resources of the area (sustainable development).

Policy Coordination

That tariff and non-tariff barriers which directly or indirectly preven t the flow of trave lers be eliminated, such as visas and departure fees.

That each country organize a private entity that will unite all the private industries which are linked to travel and tourism.

This organization should be in charge of lobbying for the industry with the different governmental agencies.

That governments should emphasize the security of people traveling to their countries as well as the general stability and security for investment.

That periodic regional meetings of governmental tourism authorities, nonprofit organizations and private sector industry representatives be held to discuss the development of a hemispheric tourism policy, incorporating challenges to be addressed for commercial integration.

That at least some portion of the value added taxes be returned to the travelers purchasing retail goods expor ted from the country , in an uncomplicated way .

That governments strongl y support a policy of open skies to all airlines that comply with all security regulations .

Harmonization Measures That, to facilitate the harmonization for measurement of tourism flows throughout the hemisphere, governments are encouraged to adopt the UN/WTO Definitions and Standards .

That governments encourage joint airline traffic programs for more efficient flows of travelers and encourage the privatization of airports and related services to reduce costs to the travelers and the airlines involved .

42

That the primary focus of each area's tourism strategic marketing position and promotion should be the area's culture, inclusive of the people, as well as the local, regional, historic, and geographic attractions, thus capitalizing on the genuine and unique local flavor of the area .

That each country establish policies that will reinforce the regional tourism exchange .

That governments identify a liaison person/team to be responsible for

43

collaboration with international organizations such as MIGA to use technology to share travel and tourismrelated information to market investment opportunities in the Americas .

That both tourism providers and consumers throughout the hemisphere be encouraged to use the most modern information technology.

This would effectively unite and enhance the supply and demand of tourism by increasing the utilization of telecommunication channels and information networks, which contain large data bases of tourism -related information .

PanelMembers Panel One: "Examining Commercial Integration of Tourism Services"

Panel Two: "Opportunities for Investment and Promotion of Tourism-related Business"

Carlos Asensio (Moderator) President Aerorepresentaciones Consultores lnternacionales Argentina

Caio Luiz de Carvalho (Moderator) President Brazilian Tourist Agency Brazil

H.E. Lilliana Canale Novella Minister of Industry, Tourism, Integration, and International Trade Negotiations Peru

Luis Dodero Vice President and General Counsel MIGA, Multilateral Investment Guarantee Agency The World Banlc

Michael Halle Executive Producer of Tourism Technology Virtual Warehouse Canada

Adnan Hassan Global Manager Investment Promotion Agency Network MIGA, Multilateral Investment Guarantee Agency The World Bank

Alfonso Mujica President National Chamber of Commerce Chile

H.E. Francisco Alberto Mayorga Secretary of Tourism Argentina Merrett Stierheim President Greater Miami Convention and Visitors Bureau USA

44

SECTORAL WORKSHOP VI: ''IMPROVING THE HEMISPHERE'S HEALTH THROUGH OPEN MARKETS"

Summaryof Discussions SUMMARY OF PANEL I: "INTEGRATING THE HEALTH CARE INFRASTRUCTURE"

AmbassadorSonia Picado from Costa Rica was thefirst speaker at the opening day of the health care workshop. Her remarks focused on the

respond to the changing needs in the health care environment.

emergence of democracy in Central and Latin America, which has strengthened strategic alliancesamong the private sector, universities and governments in building better health care systems in the region . She spoke of the dramatic changes in governments throughout Central and Latin Americaover the past 30 years. The political instabilities severely damaged the budgets and resourcesavailable to universities. However, the currentpolitical stability within the region has intensified the university systems which are importantto the development of health care trade.

She gave an example of international links of telemedicine in Costa Rica.

Under a stable political climate, her country is engaged in a pilot program connecting local universities with private hospitals in the U.S. to disseminate medical informationfrom urban to rural areas within Costa

Valencia used telemedicine as a classic example in which international collaboration between users and manufacturers is necessary in the development of telecommunication and information systems for distributing and sharing medical knowledge.

However, be emphasized that, telemedicine applications should be gradually and homogeneously brought to the market, resolving such issues as costs, reliability, appropriateness and user acceptance. This way, he said, we can reduce the financial impact of applying new technology by appropriate use.

In closing, Valencia emphasized that we must focus on technologies that produce meaningful services. Telemedicine may be a catalyst of a closely related andcommunicated new medical era created by strategic alliances between governments and private organizations, including users and manufacturers.

Rica.

Dr. Pablo VaJencia from the University of Next panelist was Dr. Brandling-Bennett, Deputy Director, Pan American Health Organization. He indicated that health issues are expanding from the national to the international realm and are no longer just personal or local coocerns. He stated that much of the rising health care cost is attributable to waste and is based on decisions made without adequate information. In his statement he pointed out that communication and information is the foundation of good public health practice. It is essential for health workers in all countries to have access to the information superhighway if we are to improve the world's health.

Californiawas the moderator for the first panel.

He provided some insights into the rapid emergence of medical technology which has generatedfinancial incentives and pressure for manufacturers of medical instrumentation to cominuously develop innovative products.

Unfortunately, he pointed out that the result is the continuous development of products which are oftenuseless, expensive and inefficient.

Tobring efficiency into the marketplace Valencia suggeststhat strategic partnerships be established amongusers and manufacturers to bring medical technologies that will improve efficiency and will

45

environment. He pointed out that the . . . f ¡1¡ purpose telemed1cme 1s to ac1 ltate the available. of a . .

I . technical, an d c Iclinicalmiormation to of practitioner, so that patients may be at thelocal assured .. receiving de fim1t1ve diagnosesand treatment of . 1 . . most appropriate ocat1on with the lowest Possible .

1e cost. However, Rawson suggests that telem should consider cost-effectiveness as a priority candid assessment of the actual cost/benefit ¡ A should be completed, to ensure that the net result .

IS to . reduce the overa 11costs o f medical care.

Furthermore, increasing health care costs make it imperative to develop cost-effective systems to produce accurate and timely information for decision makers and to train the professionals who will implement the decisions.

In addition, prevention and control of disease require cost effective and accurate disease monitoring at the local, national and international levels.

/?

Brandling-Bennett pointed out that although there a wide recognition of the importance of information and networking systems, few have been used to improve the health of the global communities.

Even in telemedicine, this technology is centered on clinical rather than preventive medicine.

Therefore, PAHO is participating in initiatives aimed at making the current networking systems more accessible to the improvement of health care.

!s

He also stated that telemedicine accounts 1or . several success ful expenments and special 1 . those emphasis was given to ose that grow from regional applications to national and international links.

Regionally, . telemedicine can support clinical dec1s1on-making m remote sites, often including decision-making by paraprofessional personnel as well as qualified medical practitioners such as physicians and nurses. Also, telemedicine can be used to communicate between specific countries. In addition, through telemedicine caregivers in one country may refer to high]; specialized clinicians in another country. In a regional/international environment, the same concept may be implemented within a region, such as Central America, or irl sectors of Latin America such that a regional referral center may be established with technical expertise in one or several clinical areas.

One such system is called "A Global Health Network (GHNet) Targeted Towards Disease Monitoring and Forecasting." This system was built through strategic alliances between leading scientists from academia, health agencies (WHO and PAHO), the U.S. Government (NASA), multilateral financial agencies (The World Banlc), industry (IBM and A TT), and the Pan American Public Health Network (PAPHN) and the Laboratory Center for Disease Control (LCDC) Canada.

Components of this system include distance education in health; networking of nongovernment organizations concerned with health; and establishment of an electronic research and health information server. Other P AHO initiatives to promote improved health care through the information superhighway include its own Internet "Gopher" and the program for Health Training for Central America and Panama (PASCAP).

Through such types of networking systems, the high costs of transporting and distributing educational technology can be reduced and at the same time the accessibility can be increased.

Next, Dr. Jorge Solorzano Mosqueda, Director

General, Hospital Sante Fe, S.A. de C.V., Mexico, addressed the workshop participants.

Solorzano pointed out that in Mexico a new health care system in being developed and is looking to provide coverage to the whole population, which will include the over 10 million Mexicans that do not have access to the health care systems right now. To achieve this, Mexico has chosen the decentralization of services and responsibilities to the different states and regions.

The next speaker was Dr. Ian Rawson, Senior

He noted that it is essential that Mexico encourages the participation of the private sector to strengthen the combination of the public and private sector: promoters of health, and to propose a mechanism

Vice President, Allegheny General Hospital, Pittsburgh, PA. He expressed his views on the advantages

of telemedicine

in the health care

46

that will motivate the creation of administrative

pretend that it can be responsible for total coverage and total insurance. It should look to participate in shared responsibility with the private sector and the insurance companies .

health care systems like HMOs that don 't exist in Mexico today. This would strengthen the private medical insurance systems, and would help achieve the goal of providing insurance coverage to all citizens.The system would also reduce the costs of coverage. Finally, this would also create competitivenessand would result in greater efficiencyandquality of the provided services.

He also talked about the necessity to (1) establish a mechanism to create professional standards in the hemisphere, (2) establish a fee schedule of medical service s which could become the basis for contracts and service agree ments, and (3) establish a Health Rights Commission to deal with the problem of medical malpractice.

Solorzanosaid that the state should look to providingbasic primary and secondary level services. He emphasized that the state cannot

SUMMARYOF PANEL2: "BREAKINGTHEBARRIERSTO TRADEAND CREATING MARKET OPPORTUNITIESIN A HEMISPHEREWIDEFREE TRADEAREA"

Panel 2 addressedthree main topics in the frameworkof integration. First, health care reform and private sector participation in the reform. Second,development of pharmaceutical researchand delivery, with emphasis in costefficiency and health outcomes . Third , the importance of tradein health goods and services to increaseaccessand quality of care.

plans under ISAPRE 's, instead of opting for the government-owned NHSS plan. ISAPREs have managed to control costs and membersh ip has grown from 62,000 in 1981 to over 3.7 million in 1994.

Caviedes asserted that "the state should guaran tee access to health to all popula tion, however, this obligation does not mean that the state should deliver services, but should prom ote health car e services and health insur ance to the pr ivate sector .

The idea is to permit the consume r to choose from the health services that serves him best. At the same time, the state should guara ntee the indigent and the vulnerable population access to the system through subsidies."

MarioRafaelCaviedes, Executive President of the Asociacion de lsapres de Chile A.G., was the moderator for the second panel. He addressed the healthcare reformin Chile and the role of the privatesector in the reform. In the 80's the Chileanhealth care system was reorganized througha series of institutional and financial reforms which included: decentralizing the NationalHealth System Regional Service Areas and re-groupingthem into the National Health Service System (NHSS). This reform also established thelegislative framework and financing mechanismsto support the development of prepaidprivatehealthinsurance plans (ISAPREs) .

Caviedes, reemphasized that "there cannot be regional integration without private sector participation and that the state should promote collaborationof the private sector in its health care system." He also stated that economic integration in health matters will occur when the countries of the region manage to free themselves from the enormous bureaucratic burden which exists in public services, particularly in Latin America , and the only way to achieve this is by means of promoting private health care services.

Throughthe creation of ISAPREs, workers can participate in the private health insurance plans.

Theycanchannel their 7 percent health payroll deductionsintoone of the pre-paid health insurance

47

1.

2.

To illustrate the benefits of public- . . in . the health sector, the panelistPrivate cooperation . .

Brazil, s pubhc-pnvate car 10Iogy project traced . d .h frorn 1960_ the' proJect starte wit a small group of cardiologists and heart surgeons . This group 1ead to the establishment of an institute which muitipl¡ itals ied into other institutes, hospitalss, and the development of technology and products related to he . . an surgery . The resu lts o f com bning the efforts of the public, private and hospital resources can be seen in Brazil's outstanding cardiological program

When balancing the participation of the private and public sectors in health care, integration processes must take into consideration the differences existing in the countries. The government and the private sector need to work as partners.

The view is that the government efforts, when applied correctly, are fundamental in preventive medicine and health promotion, and constitute a means to avoid the inequities resulting from the application of private models.

At present there are five Brazilian companies which manufacture specialized products in the area of heart surgery. These Brazilian firms hold jointly 10 percent of the world market of disposableproducts for heart surgery . Brazil ranks third in the world in absolute volume of heart surgeries.

Brazil's success in developing an outstandingcardiological program with technology and product spinoffs show what is possible in the medical sector when the public, private, and hospitals combine their efforts.

On the morning of July 2, when the summary and recommendations from the previous day were discussed, several panelists and participants provided their views on health care reform.

The following statement ensued from these discussions. "The state should guarantee access to and choice of all health services and subsidies to the economically disadvantaged . However, this obligation does not mean that the state should deliver all services, but to promote some health care services and health insurance to the private sector. "

Dr. Harvey Bale, Senior Vice President, Pharmaceutical Research and Manufacturers Association (PhRMA) stated that pharmaceuticals will play an increasingly important role in providing cost-effective health care solutions for people in the Western Hemisphere. According to this panelist, increasingly new medicines extend productive lives, reduce the economic cost of illness and save costs of hospitalization and surgery. Bale stated that industry invents nine out of ten new drug therapies and with the use of increasingly sophisticated techniques is addressing today diseases that are among the most difficult to cure, including cancer, heart disease, AIDS and other infectious diseases. The panelist said that PhRMA companies during 1995 will invest $15 billion in research and development searching for new drug cures. Bale contended that intellectual property protection is an absolutely needed support for investments into new cures. The speaker argued that intellectual property piracy not only deprives research companies of funds to make needed mvestments in new cures; but in additton' resources of pirating companies themselves are

Also during this discussion, Valencia and Hon. Mary Collins, former Minister of Health in Canada, objected to the exclusive emphasis in private sector health care and insurance by Caviedes.

They argued that the earlier government-supported health system in Chile had provided equitable access to quality care, and that single payer systems such as that in Canada offered advantages in cost containment and assured access.

Ronaldo Pitta, Treasury Director, from the Accociacao Brasiloira da lndustria Medico Hospitalar Odontologica spoke about a successful health sector project in Brazil involving the integration of government institutions, private companies and hospitals. It was this speaker's contention that the hemisphere is making the initial steps towards a market of promising opportunities in the area of medical care and technology in the health sector.

48

socially wastedin the pursuit of quick profits at the

(i.e. population growth in senior citizens has created new demand for expensive medical care.)

expenseof research. Bale alleged that there is a socialandhealthcost of intellectual drug piracy as wellas a commercial and market access cost.

To alleviate some of these problems Reforma al Sistem de Salud (Reform of the Health Care System) was created. Gracia indicated that the reform has two major objectives: to divide the health care services into two categories, those who can pay for coverage and those who cannot; and to modernize the health care system by opening it to competition.

Balepointedout that strong intellectual property protectionstimulates greater investment and technology transfer, promotes new industries and jobs and in the health care field has the added benefitof promoting research into new chemical andbiotechnologyproducts. The panelist stated thatthe elements of strong intellectual property protection must have adequate recognition of the termof protection, the territoriality of intellectual propertyrights, the totality and completeness of such rights and the necessity for transitional protection. In addition, Bale contends that the essentialsof an effective IPR regime include: political recognitionof intellectualproperty rights' (IPR) social and commercial net benefits in the fonn of better health and higher investment; economic recognition that patents do not equate to monopoliesbut rather to dynamic competitionto createnew products; and legal respect for full intellectual property rights.

Grey Warner, Senior Vice President, Me rck Latin American Region, opened his remarks by

contending that worldwide, health care systems are facing a financial crisis. This panelist said that there is a growing imbalance between demand (demographic changes; growing expectations; new technologies) and supply (limited financial resources). Warner stated that medicines account for a relativity modest but important part of health spending, and that medicines when used properly are cost-effective and contribute to overall health care savings. Warner pointed out that international comparisons suggest both serious over-and underconsumptionof medicines and that often the most appropriate medicines are not selected despite limitedresources.

Carlos Gracia; Director of Health Programs, Ministry of Health, Mexico , began his remarks

by announcing that Mexico recently started a refonnprocess in its healthsector. The goal of the reformwas to eliminate trade barriers and to encouragefree competition. The panelist stated thatthisreformconstituted one of Mexico's most importantsteps to advancing the creation of a hemisphericfree trade zone with regard to the provisions of health care and financial services.

Warner argued that lack of patent protection does not produce significant savings. For example in Brazil pharmaceutical copies on the average are only7.5 percentless expensive than the innovative brands, and one in four copy brands are more expensive than the innovative brands.

Warner summarized his remarks by contending that there is a need for new competition-based models in health care; there is a need to focus on health outcome improvements; a need for all participants to change to compete; and a need to improve rational use of medicines. All players must work together to get the desired results.

Gracia pointedout that even though this reform has made some advances in health care it is not uniform,leaving around 10 million Mexicans without basichealthcare coverage. In addition, to traditional diseases diseases such as cholera and respiratory infections,the panelist stated that Mexico is now faced with new health problems derived from changesin living style such as mental illness and heart disease. Adding to this problem, Mexico is facinga radicaltransformation in demographics

Brandling-Bennettwho participated in both panels stated the importance of trade in health goods and servicesto increaseaccess and quality of care. To that end, he identifiedimportantissues that must be

49

block or limit access to markets. Establish¡ proper regulatory framework and appl . tnga mechanisms t~ promote trade in heal~~;;?en and goods are unportant means to increa ices to health care and to improve the ms,~l~ccess -iuo. It)' Of services.

examined so that hemispherictrade can become a means of increasing access to quality health services in an equitable manner.

One main issue is the establishment of an appropriate regulatory framework.

This framework should include: standards for establishing and operating hospitals;standardsfor medical practice and measuresto guaranteequality of care; certification and licensing requirements for foreign health professionals to practice in importing countries; regulations against unfair trade practices and competition on the part of foreign providers of goods and services to the detriment of national competitiveness; the establishment of national/supranationalregulatory agencies to define and enforce standards for the manufacturing of health related products and pharmaceuticals,and the protection of consumers.

Regarding trade in health goods and se . rv1ces appropriate regulatory frameworks and the of internal markets must be balanced with . . . th reign demand. An mcrease m e health sector tr d . . ae will have an ~por~nt ~pact on the overall economy. This regional mtegration, howe . a11¡ ver requires strategic iances between international organizations,nationalgovernments, private secto businesses,non-profitorganizations and the publi/

Conclusion There cannot be regional integration without private participation. Technology transfer i.e., telemedicine, should be applied as a systematic process, and should consider the capabilitiesof each country to provide the necessary support.

Trade in health goods and services will be favored throughregionalintegrationif barriers are reduced while applying open mechanisms to increase quality and access.

It is important that the regulatory framework serves to foster trade rather than act as a barrier to trade. Measures contained in regulationssuch as: bylaws of professional organizations; limited reimbursement of treatment costs for services obtained overseas by health insurancecompanies; lack of malpractice insurance; limitationson the establishmentof foreign commercialpresence and capital repatriation, can result in restrictions that

Recommendations Form international panels to prepare stages and processes for health care technology and services.

Includeinternational agencies, such as the Pan American Health Organization (PAHO), in the design of a common strategy to address health integration issues.

Create a profile for each country's needs and requirements for the integration process.

Recognize Intellectual Property Rights' (IPRs) social and commercial net benefits.

Develop mechanisms for creating partnerships between the private and public sectors in health issues.

Harmonize standarddsfor health related products and services as well as malpractice reform.

50

PanelMembers PanelOne: "Integratingthe Heathcare tureII Infrastructure

Panel Two: "Breakingthe Barriersto Trade

and CreatingMarket Opportunitiesin a Hemisphere-wideFree TradeArea"

PabloValencia (Moderator) Director Officeof Technology and Transfer Universityof Southern California UnitedStates

Mario Rafael Caviedes (Moderator) ExecutivePresident Asociacionde Isapres de Chile A.G. Chile

HerExcellency

Harvey Bale Senior Vice President PharmaceuticalResearch and Manufacturers of America United States

AmbassadorSonia Picado Embassyof Costa Rica

IanRawson SeniorVice President AlleghenyGeneral Hospital UnitedStates

RonaldoPitta Treasury Director BrazilianAssociationof Medical Equipment Manufacturers Brazil

DavidBrandling-Bennett DeputyDirector PanAmerican Health Organization

Carlos Gracia Director of Health Programs Secretaria de Salud Mexico

Jorge Solorzano Mosqueda DirectorGeneral HospitalSanta Fe, S.A. de C.V. Mexico

Grey Warner Senior Vice President Merck Latin American Region Merck & CompanyInc. United States David Brandling-Bennett Deputy Director Pan AmericanHealth Organization

51

SECTORALWORKSHOPVII: ''ENVIRONMENTAND THE ECONOMICSOF INTEGRATION" Summaryof Discussions

Over the course of the two panels dealingwith environmentand the economicsof integrationthe following . . issues were raised and discussed. The summarypresenteddoes not representa consensuscomingoutof the works.hopbut, rather, a synthesisof discussionon numeroustopics that were broughtto thefloor by both panelists and workshopparticipants.

SUMMARY OF PANEL I: "ENVIRONMENTAL REGULATIONAND TRADEINTEGRATION" Environment as a component of all trade discussions

sustainable development into its trade and economic policies.

The issue featured most prominently in this panel's discussion was the importance of integrating sustainable development into the formal working group process, in each of the work groups, throughout the discussions of regional and hemispheric trade integration. Sustainability should also be made an integral part of existing multilateral institutions and their treatment of economic, political, and social issues.

The perception that environment is a limiting factor for trade integration must be overcome.

We must pay more attention to the politics and public relations aspects of environmental issues.

Outside of this workshop, we are perceived as the enemy, preventing profits in other industry sectors, preventing development. Our main job is to make other groups look upon environment as an integrated part of the economy .

The new vision of economic development, which needs to be adopted by all industry sectors in all parts of the hemisphere, includes political, social, economic, and environmental elements.

Regulation and Enforcement

The protection of the environment in a frameworkof free trade is best achieved by applying the "polluter pays principle" and internalizing environmental costs.

It is necessary to introduce an environmental dimension into economics. Somehow, the costs of environmental degradation must be absorbed, the question is who and how . Will the costs be paid externally or internally? Can a GSP-like mechanism be implemented?

Are there incentives and/or disincentives that will encourage manufacturers to think about a product's life cycle? Can additional debt-for-nature swaps be implemented to help conserve natural resources in the hemisphere? Can financing be made available for for technology adoption?

Each nation and society has a sovereign right to set and choose its own regulations and environmental standards according to the economic and social priorities and ecological circumstances of the country. Keeping this in mind, each nation should strive to raise its environmental protection standards .

Enforcementof environmental laws in the Americas should include: sufficient coordination and cooperation between nations; joint enforcement programs between border nations; a clear continental treatment of problems that cross national boundaries; information sharing initiatives;

In part because there is no overarching organizational entity dedicated to environmental issues, it is incumbent on each country to factor

52

andmechanismsfor rapid deploymentof technical assistanee, technologytransfer and training between thenationsof the Americas.

environmental organizationshould be created or the capacitiesof existingregional organizations such as the OAS or PAHO should be increased. The goal being to gather and analyzedata and trends, create mechanisms by which non-governmental parties (businesses and citizen groups) can initiate investigations; compel disclosures of publicly and privately held information, and generally enhance the transparencyof environmentalmanagement.

Balancingmaintenance of natural resources with has traditionallybeen achievedthrough development legislation. However, in many parts of the hemisphere,the legislation that may exist is not adequatelyenforced.

Incentives for clean industries should not be considered until enforcement is effective.

Governmentsin the hemisphere must provide leadership andresourcesfor enforcement.

The Commissionfor Environmental Cooperation, createdas a resultof the NAFTA parallel agreement on the environment, is an experiment in the combinationof trade and environment and is one organization that may be able to provide the institutionalforum that is needed.

Indealingwiththe Mexico--U.S. border, areas of focushave included making rules compatible on both sides, reporting data in a similar fashion and usingsimilarmethodsof evaluation. Attemptshave not been made to create standards that are same in eachcountry.

The Commission might expand its work and opportunitiesto the hemisphereor, alternately, the internationalprocess can be strengthened within each countryof the hemisphere (again, integrating environmentinto all trade and economic decisionmaking).

Training,Education, and Institution Building

Theexperienceof Mercosurcan also be considered.

In this case, there is no overriding environmental institution but, rather, the relevant parties meet periodicallyto discuss and make decisions on key issues. In the Mercosurprocess, every negotiation oneverycommercialissue offers the opportunity to include environment -- agricultural subsidies, phytosanitary measures, and the like. Through Mercosur,supra-nationalnorms are generated.

Environmentalcooperation, technical assistance, and learningfrom the experiencesof others are the best vehicles for expanding environmental protection valuesin the hemisphere.

Eachcountryin the Americas should have in place a strong environmental training and a strong enforcement program.

Theprocessof institutional strengtheningin each country willtakeplace through small steps. One of themostimportantsteps is developingand sharing knowledge.

Untilthe knowledgebase has arrivedat a commonstandard, institutions can do very little.

A bestenvironmentalpractices conference,sharing the experienceof all entities in the hemisphere,is suggested.

A programshouldbe put in place to (a) promote the gathering and dissemination of information regarding overall national levels of emissions and major pollutant discharges to the ambient environment; (b) promote an environment of consistentcompliancemonitoring, and (c) report (in comparableterms)on the progresstoward achieving sustainable development and environmental conservationincludinginformationon compliance investmentlevelsin each country,compliancerates, and results of enforcementactions.

InternationalInstitutions and their Role

Thefirststepfor better regional governancemay be the creation of an institutional forum to systematicallyconsider and develop regional environmental policies. Either a new regional 53

Institutional arrangements must be in place to support countries in making trade an effective tool for sustainable development.

business , teir voices must be heard during the Process of mtegratmg sustamab1hty into thetrade process . e

The WTO gives us a framework for rule-making as the free trade area of the Americas is developed.

Certain niches for environment and trade in the hemisphere, not currently addressed in the WTO (such as eco-packaging) can be addressed separately . Some suggestions include a clearing house of environmental regulations, cooperation on standards setting, and capacity building .

.

Toe cost of technology is problematic -- finan ¡ ing IS significant , especially for small countries like Ecuador .

The U.S . Foreign Service is commended for facilitating the inclusion ofNGOs and others in the process. Increased public participation at all level: is the goal.

Trade Sanctions and the Environment

International Agreements

In the absence of effective mechanisms for international environmental law, environmentally concerned governments and people have increasingly turned to other tools such as conditions on foreign aid, the private sector standard setting process (ISO), and trade measures. To avoid the use of trade sanctions , public and private sector leaders need to strengthen the other tools -specifically we need to strengthen direct means of environmental protection rather than doing the job indirectly through trade sanctions.

Each country of the Americas, consistent with Agenda 21 and the Framework Convention on Climate Change, should promote sustainable energy development and use.

All countries in the hemisphere should endorse and implement global environmental treaties .

Potential Areas of Cooperation State and provincial relationships should be considered an opportunity to share experiences.

For example, Denver is working with Santiago and Mexico City, sharing its experiences related to air pollution . State-level exchanges allow parties to move more quickly to organize training programs and exchanges.

The National Governors Association meeting and its discussion on state cooperation in the Americas was mentioned .

The avoidance of environmental disputes and an equitable process for dispute resolution among trade partners should be a central role of any institutional arrangements .

Trade measures should be used only as a last resort to promote environmental objectives, unless those measures are agreed to within a regional and/or multilateral framework.

An important area of cooperation is information/data transfer. Specifically , there should be a focus on identifying successful demonstrations where private-public partnerships have worked to solve environmental problems .

Technology demonstrations create an important pool of information that could be used broadly throughout the hemisphere.

A Continued Voice for the Private Sector The importance of small businesses and their role cannot be stated too strongly . Particularly given the fact that trade and environment measures often have a greater affect on small and medium-sized

54

SUMMARY OF PANEL 2: "COOPERATIVE APPROACHES TO COST-EFFECTIVE ENVIRONMENTAL PROTECTION" r iate Environmental Measures

ISO 14000 -

General

Guidelines on Management Systems, Principles and Supporting Techniques; A Specification Standard for Environmental Management Systems that contain the requirements for certification or registration by third party certifiers; General Principles of EnvironmentalAuditing; Auditing an Environmental Management System; and Qualificationsfor an Auditor.

Appropiate Environmental nmentalpolicy should be consistent with a Enviro try's level of development and should benefit country'sThe developing world can not afford to people¡ nd energy and resources on wasteful expend . environmental measures. The good news 1s that . hiy to develop en v . have spent 1av1s . dustrial countnes solutions to environmental problems. The process 5 f developing technology, prototypes,and optimized solutions,has yielded sound relatively inexpensive technologies-- technologies that developing countries can use to solve or prevent environmental problemsat a relativelylow cost.

ISO 14001 -

ISO 14010ISO 14011 ISO 14012 -

Some things can be done to avoid pollution at almostno cost. Other things can, with minimal investments, improve significantly the health of a community. Safe drinking water and sewage collectionsystems with at least primary treatment andhighefficiency particulate collectionfor power generationshould be high priorities because their costis low and they improve human health

Given the conclusion of the Miami Summit, at whichthe 34 nationsof the Americas acknowledged that "sound environmental management is an essentialelementof sustainable development" these ISO 14000 Standards provide a globally accepted framework for the goals of the hemisphere. The challenge now, is to find all the appropriate and positiveand encouragingways to incorporate these standards into the relationship that exists between national regulatory authorities and the business community. For example, can the ISO 14000 standards be used in regulatory reform measures now under discussion to replace the command an control approach to environmentalprotection?

Encouraging developingcountries to adopt the most stringentenvironmental standards in areas that are not a high priority for that country results in a hollowvictory because enforcementis unlikely.

ISO14000

ISO includeselements for conservation of natural resources as part of certification process. Green purchasing and other ideas will also be included.

Better techniquesfor recycling and reusing will be a helpful way to avoid the need for market intervention.

TheInternational Standards Organization (ISO), justpriorto the Forum, overwhelminglyagreed to advancethe Committee Drafts of the ISO 14000 standards on Environmental Management Systems andEnviro Env nmental Auditing. Over 40 countries includingArgentina, Brazil, Canada, Chile, Colombia' Mexico, Uruguay, and the United States provided input. The key standards that have (DIS) progresse d to the DraftInternationalStandard stageare:

Initially the ISO concept of risk assessment was embodied in guidelines for impact assessments.

While there is not a current ISO plan to develop harmonizedrisk assessment standard, it is a topic amongnational delegations.

55

Environment and the Economy

More cost effective, allowing comp . nies to chose the most efficient ways to . c achieve their commitments; Costs governments less to monitor and enforce voluntary measures than command and control measures; and Reduces confrontation and promotes . h cooperative approac es between the . d e emitters government, an environmental groups .

Environment is an integrated part of the economy.

From an economic point of view environment is unportant because: 1)

Minimal environmental impact indicates the efficient use of resources (a good environment is a good economy).

2)

Environmental disasters.

3)

The environment is closely linked to the health of the workforce.

4)

Expenditures on environment are like expenditures on infrastructure, they are an investment in the economy with significant long term economic benefits.

disasters

are economic

Concerns Participation has not been adequate. Some industry sectors rely on the leading companies to volunteer and make a token response for the sector, hoping they can escape any serious commitments .

Government incentives and support for voluntary measures can cost the taxpayer more. Also a tremendous amount of time is taken in negotiating agreements on voluntary compliance .

A system of follow-up to ensure that companies meet their voluntary commitments, and to stimulate action from those companies that refuse , needs to be implemented.

Free trade is sometimes perceived as aggravating the environment because increased production accelerates the consumption of resources . However, as we move from an age of materials to an age of knowledge, improved technology can help us use fewer natural resources in production. Market forces need to be cornerstone of technology adoption.

Canada has identified five tiers of effective environmentalinitiatives for which clear targets and timetables must be set:

If we wait until 2005 to put environmental plans in place, it will be too late. By encouraging industries and governments to look at sustainability sooner, each country protects its asset base .

1)

Voluntary initiatives : Some programs in this tier include : environmental management systems, pollution prevention, total quality environmental management, responsible care programs , government environmental procurement requirements, accelerated reduction/elimination of toxics (ARET) , and OMMRI/CIPSI

2)

Encourage participation : ¡ Examples include peer review of non-complying companies, using government preferential purchasing and contracting, periodic listings of non-compliers in the media, and

The experience of Mexico shows that cost of pollution control is a good infrastructure investment in the long run. Prioritizing water treatment should be agreed upon because it is a wise investment.

Implementing Voluntary Pollution Control and Prevention Measures The Canadian Experience has identified a number of assets and concerns regarding voluntary efforts underway there.

56

infonnation programs complying companies .

3)

4)

5)

to assist con-

for example, participate in regional and national industrial environmental committees along-side government authorities and NGOs . The National Association of Industries (ANDI) further chairs a permanent technical advisory committee for the Ministry of Environment as it develops regulations and development projects .

EnvironmentalInstruments: These are non-regulatory instruments that support voluntary actions and are already being undertaken . For example, audits and liabilitiesrequired by the banking industry, insurance company liability requirements, and economic instruments .

ANDI has also been promoting Responsible Care initiatives since 1993 and is trying to organi ze a Center for Cleaner Production based on UNEP's initiative and the EPA's EP3 pollution prevention program.

Smart Regulatory Instruments : Regulationcan be made "smarter" by focusing on assistive regulations (e.g., economic instruments, pollution prevention),field-leveling regulations, the threatof regulation , command-and-control regulation,and effective enforcement.

Industries, government authorities , and nongovernmentalorganizations in the developing world should be allowed, through a kind of "open house ," to learn more about cleaner production methods being implementedin the United States and Canada .

"Cleaning dirtiness" is an obsolete approach which industriesin the developing world should attemp t to leapfrog with the adoption of clean technologies .

This approach will serve to save small and medium size industries the cost of high technology cleaning .

Zero Impact Companies (ZICs): Companies that want to avoid the neverending grind of tougher and tougher initiatives to protect the environment, develop business plans that will lead them to becoming zero impact companies. They develop sustainable development plans that will result in their operations having virtually no significant impact on the environment.

Pilot project demonstrations of cleaner production methods are encouraged in sectors such as metal finishing, dairy, food processing , beverage processing, plastic recycling, and others .

ProjectXL from EPA is example of net benefit compliance yielding net benefits. Rule making came abouta month ago, generating an open-ended dialogue on achieving or going beyond compliance in exchangefor greater flexibility. The project stimulates environmental management approaches and technologydevelopment, gets away from command and and control, and may change thinking of policymakers in the U.S. yielding more productive approaches.

Possible partners in the economic integration process have to discuss and agree on what is understoodas "unsustainable patterns of production and consumption" and what can be done to reduce and eliminate them.

It is essential to include the small business community in the environmental dialogue. Since small businesses have limited resources and significant economic constraints, they bring a different perspective to the discussion . Because of these limited resources, they have many innovative ideas and processes to help solve environmental problems .

¡ Initiativesin the ManufacturingSector/Public Participations

One of thekeyroles that can be played by industry throughoutthe hemisphere is to encourage a dialoguewith environmental authorities in their countries.

More than 250 industries in Colombia,

The Colorado Environmental Business Alliance is a potential model of private sector cooperation providing a voice for small companies, getting 57

Many industrial industrials sources encourage the professional

The education systems of the hemisphere important vehicle for the development of are an . rnuch needed environmental consciousness . A program . . C Rica in grammar schoo l in osta ca, for example, has brought about a significant change of attitude. Each country should focus on education .

improvement of government environmental agencies . These agencies need to be prepared to negotiate sound and progressive solutions and make effcient decisions based on quality information and nsk analysis .

Risk assessment is valuable tool. What Principals should be considered when looking at risk assessment to avoid some of the problems experienced in the U.S .?

involved in training issues, and creating effective linkages with state and federal governments.

Training and Technical Assistance

Recommendations Continued discussion and debate produced the following points and recommendations which were agreed to broadly by workshop panelists and participants. It was further agreed that all of these recommendations should be considered and acted upon immediately in order to insure that they will be an integral part of the process leading to trade integration in 2005. This is essential to provide sustainable economic prosperity and a higher standard of living for citizens throughout the hemisphere.

resources on measures .

Recognizing:

That the participation of the private sector, including small and medium-sized enterprises (SMEs), and non-governmental organizations, throughout the process is essential.

wasteful

environmental

That environmental training and capacity building are of great importance.

That environmental cooperation, education, and technical assistance are the best vehicles for expanding each country's sovereign right to set its own environmental standards .

That trade, economic and environmental policies are increasingly interrelated .

That environmental regulations as a barrier to trade are a concern to many nations .

It is Recommended to Trade Ministers that:

That environmental infrastructure investment should be considered a key component of every industry sector and every country's economic development strategy as it will ensure the efficiency and competitiveness of production , and the social and economic well-being of all citizens of the Americas.

Sustainable development be incorporated into the formal working group process, in each of the work groups , throughout the discussions of trade integration.

Sustainability should also be made an integral part of existing multi-lateral institutions and their treatment of economic, political, and social issues.

That environmental policy should be consistent with the level of development of the country and should benefit people. Few countries can afford to dedicate energy and

Governments incorporate the participation of private sector, including SMEs, and non¡ governmental organizations into the

58

environmental and trade law making processes.

Regional institutions , such as the Commission on Environmental Cooperation (CEC) and OAS , be strengthened to ensure appropriate collection, analysis and dissemination of basic environmental information .

Governments increase the enforcement of their own country's environmental regulations and encourage industries to participate in voluntary environmental management, self-auditing and selfpolicing initiatives.

Environment be integrated into education programs, in elementary schools for example, as a way to help educate society and as a first step toward required environmental awareness throughout the hemisphere. Environmental awareness should also be increased through greater dissemination of environmental infonnation.

Governments encourage their industry to participate in the ISO 14000 process and other voluntary pollution prevention and control initiativesthereby reducing the need for command and control environmental legislation.

Governments act to ensure that environmental protection standards and regulations do not represent unfair and unacceptable barriers to trade.

A hemispheric conference (perhaps a SpecializedConferenceof the Organizat ion of American States) be held on the identification and follow-up policies of environmental concerns of hemispheric nature (e.g., how to deal with transboundary environmental issues , continental transportation of toxics , managementof migratory species and their habitats) .

Governmentsin the hemispherediscuss and identify appropriate means to incentivize industry to adopt policies of sound environmental stewardship .

It isRecommended to Appropriate Government

Governments throughout the hemisphere encourage multi-lateral and major government lending institutions to make environment, particularly institution building (e.g., technical training, infonnation exchange, technology demonstrations, etc.), a higher priority .

Officialsthat: Each country identify, in concert with the private sector and non-governmental organizations (NGOs), its own environmental priorities and present those priorities to the meeting of ministers at the SustainableDevelopment Conference to be held in Bolivia in 1996.

Countries be encouraged to endorse and implement global environmental treaties .

59

Panel Members Panel One: "Environmental Regulation and Trade Integration 11

Panel Two: "Cooperative Approaches to CostEffective Environmental Protection 11

Victor Lichtinger (Moderator) Executive Director Commission for EnvironmentalCooperation Mexico

Ralph Peterson (Moderator) CEO CH2MHill InternationalLtd. United States

Pedro Tarak Director Fundacion Ambiente e RecursosNaturales Argentina

ManuelOlivera ManagerEnvironmentalAffairs AsociacionNacionalde Indutriales Colombia

William Futrell Director Environmental Law Institute United States

P.J. (Jim) Adam CEO Black & Veatch United States

Raul Deju

Gary Gallon President CanadianEnvironmentIndustry Association Canada

President, Western Operations Chemical Waste Management United States

Joel Charm Chairman EnvironmentalManagementTechnical AdvisorySub-Groupfor ISO 14000 AlliedSignal United States

Jorge Cabrera Secretary Central American EnvironmentalCommission Guatemala

60

FUNCTIONALWORKSHOPI: "HEMISPHERICCOMMERCE: SETTINGTHE STANDARDSOF INTEGRATION" Summaryof of Discussions Thepanelreviewedthe commitmentconcerning standardsin the MinisterialJoint Statementand discussedhow the private sector should support this political commitment. The panel acknowledgedthe importance of tradeand discussedspecific recommendations standardsand confonnityassessmentproceduresto international to ensurethat the hannonizationof standardsand confonnityassessmentproceduresserves the interests of all parties.

SUMMARYOF PANEL 1: " STANDARDS" priorities, a resource plan and the realization that there will be tradeoffs.

The moderator introduced the topic by reviewing some current obligations that exist under NAFT A and GATT as they relate to standards. A principal obligation is that countries not use standards to create unnecessary obstacles to trade.

He highlightedthe fact that, in their Joint Declaration, yesterday, the 34 Trade Ministers agreed to ensure that the FT AA will be fully consistent with the provisions of the Agreement establishing the WTO.

One panelist emphasized the evolution of the Latin American attitudes with respect to standards.

Historically, Latin American countries used standards to protect domestic production. When these countries changed their approach and used the standards of a developed country, they became captive markets. The panelist suggested that Latin American countries traditionally participated little in international standardization processes because they did not recognize the importance of these processes, but said that that is changing.

Ministers also agreed to establish a Working Group on Standards, for which Canada will be the initial coordinator. The Working Group will: recommend ways to enhance transparency; compile information on conformity assessment and accreditation bodies; recommend ways to promote understanding of the WTO Agreement on Technical Barriers to Trade; make recommendations on product testing and certification, with a view to mutual recognition agreements.

One panelist discussed the relationship between standards and the creation of the Free Trade area of the Americas. He emphasized that the creation of free trade faces tremendous obstacles.

He discussed some regional approaches to standards such as in the Central American Common Market AndeanPactandMercosur, ALADI and NAFTA'.

He agreed with another panelist that we must recognize that technological and economic differences exist for competitiveness in the hemisphere to continue to increase .

One panelist reviewed some barriers to achieving greater harmonization and implementation of standards in the hemisphere, such as the wide divergence of economic development and the difficulty in achieving consensus between economically diverse participants. The panelist furtherstatedthat effective harmonization requires vision, organizational structure, establishment of

One panelist emphasized that tl)e approach to harmonization must be specific to each sector since each is unique. He also stated that all countries must better use their existing investment in international and national standards and conformity assessment institutions , including ISO, IEC, ITU 61

and COPANT . Members of the audience voiced agreement with this point. In addition, the harmonization activities in NAFTA and Mercosur must be coordinated, and must obtain the active participationof industry. We also need an ongoing set of meetings to pursue this harmonization work.

of litigation. For example, U s . · · insuranc providers may not insure companies on product liability unless they comply with voluntary standards. Some panelists defended the . use of voluntary standards, statmg that is not that the process is closed but that industry has not made . ae adequate efforts to get mvo1ved.

An audience member from Mexico suggested that we need to begin to harmonize in other areas, such as tariff schedules, rules of origin, investment, industrial and intellectual property, temporary entry of persons, dispute settlement, safeguards, sanitary and phytosanitary. Also, he stated that we need to start thinking about putting an end the problems created by the Anglo-Saxonsystem. In those countries, voluntary standards can become tantamountto mandatorystandards, due to the fear

An audience member from FECAEXA, the e Central American Exporters Association questioned the implementation of standards individual countnes versus the adoption of international standards such as ISO 9000or ISO 14,000, which are more neutral and less subjectto protectionist interests. He suggested we moveto global standards and measurements of quality.

by

SUMMARYOF PANEL2: " CONFORMITYASSESSMENT" One panelist emphasized that we cannot separate standards and conformity assessment issues. In Canada, a national accreditation system for standards and conformity assessment systemshas been developed. Initially, it was strictly for Canadian organizations but was opened up under the U.S. - Canada FTA and NAFTA. The Panelist emphasized that each country has to have a national accreditation program, in order for us to develop mutual recognition agreements on a hemisphericbasis. The panelist stated that for the future we must consider new ways to satisfy growingmarkets such as supplier declarationsand the possible use of an EC-type mark for the Americas. For this work, we need all stakeholders to participate.

The Moderator introduced the subject by pointing out that the U.S. system is decentralized and includes both public and private sector components. The ultimategoal is one product, one market, and one test, and NIST is committed to working with industry to achieve this goal.

One panelist suggested that the goal is to develop a "foreign policy" of conformity assessment designed to enable manufacturers to certify to any standard upon request in any market. The componentsof this certification system are access, contact and ties ("ACT"). After a country is identified, the safety infrastructure is assessedand a program of communicationis established. The panelist made the followingrecommendations: we must be sensitive to the political and social circumstances in these countries; we must study the myriad of agreements such as the G-3, NAFTA, COPANT and Mercosur to see how they establish functional relationships; we must supportorganizationsthat already exist; we must find ways to reach out to these countriesto determine "state of readiness" and provide developmentalassistance.

One Panelist argued that the term "conformity ssessment is insufficientto capture au the things 1tmust mean. It must include metrology, technical regulation, voluntary standards, conformity · . . We assessment, and quality system registration 1 also must take account the work of the subregional 0 groups such as Mercosur, which has done a lot work in this area.

JI

One panelist stated that within the frameworkof · 1 mtegrauon, · · · reg10na isolated efforts doo not suffice,

62

so that our commitment to regional bodies such as COPANT and Mercosur must be firm . The panelist suggested that we implement a regional coordination program to work toward making national quality systems compatible . The panelist offered the facilities of its institution, the National Institutefor Industrial Technology in Argentina for thisundertaking. At the same time , it is important to adopt ISO recommendations whenever possible to ensure insertion in global trends in standardization and conformity assessment.

One panelist stated that the best way to achieve qual ity is through quality management, and the way to achieve quality management is through good employees. This suggests that a standards system is meaningless without a viable educational strategy .

Conclusions The harmonization of standar ds and the mutual recognition of conformity assessment procedures in the hemisphere are essential to foster ing free trade.

Some salient points of agreeme nt were that: industry involvem ent and public/private sector cooperation is critical to the success of these harmonizati on effo rts; this work must proceed on a sect or -bysector basis ; we must use the standard s infr astru cture already in place .

One panelist pointed out that each country has to integrate its system with energy and with the participation of the private sector, otherwise a standard designed to open the market may become a constraint.

One panelist noted how compliance to standards can become a goal in itself, but we must not forget that it can also permit a company to increase its competitiveness.

63

Panel Members Panel 1 : "Standards"

Panel 2: "Conformity Assessment"

Richard LaF ontaine (Moderator) President Standards Council of Canada Canada

Mary L. Good (Moderator) Under Secretary for Technology Administration Department of Commerce United States

Jose Vincente Maldonado Minister of Industries and Commerce ' Integration and Fishing Ecuador

Tom Castine President Underwriters Laboratories , Inc United States

Sergio Mazza President American National Standards Institute United States

John Kean President Canadian Standards Association Canada

Dennis Mangino President and CEO NSF International United States

Silvia Portnoy President National Industrial Technology Institute Argentina

Pablo Benia Director Institute Uruguayo de Nonnas Tecnicas Uruguay

Julio Cesar Carmo Bueno President Metrology Institute Ministry of Industry, Commerce and Tourism Brazil Hans Kluge Chainnan Automatic Switch Co. United States Dr. Augusto Pozo Pino Director Centro de Calidad Mexico

64

FUNCTIONAL WORKSHOP II: ENHANCING INTEGRATION THROUGH LEGAL SYSTEMS"

11

Summaryof Discussions Panelists from the public and private sectors of Brazil, Ecuador, Mexico, Peru, Venezuela and the United Statesdiscussed the role of legal systems in enhancing hemispheric integration. Two panel discussions focused on integratingcommercial law systems and on alternative methods of solving private international commercial disputes. This paper provides a summary of statements and suggestions made by workshop panelists and members of the audience, it does not purport to reflect a consensus on the issues covered, except where explicitly noted .

SUMMARY OF PANEL 1: "INTEGRATING COMMERCIAL LAW SYSTEMS"

Thispanel discussed areas in which the integration or hannonization of legal systems in the hemisphere could contribute to commercial integration. The discussion focused on the harmonization of trade and commercial laws, regulations and practices in the hemisphere that would facilitate the crossborder movement of goods, services and transactions and reduce the potential for corruption.

must be quite high. Free trade would cease to be free if goods and services could not cross national borders quickly and inexpensively as a result of "legal" impediments. Simply put, free trade and invesnnent require an uninterrupted legal highway .

Twenty-three Inter-American conventions approved by the Conferences on Private International Law, sponsored by the Organization of American States (OAS), provide some points of reference (with limited results) on matters such as negotiable instruments, powers of attorney , provisional court measures, arbitration , transport by road and applicable law in international contracts .

The panel identified insolvency, international transport, secured financing and documentation for letters of credit as legal areas where harmonization may have immediate and the most beneficial impacts on commercial integration.

Other areas for study or work include administrative, competition and corporate law , requirements for cross -border trade, international civil responsibility for cross border environmental contamination, a continental model law on corporations, the concept of a "global entity" , and the integration of harmonized legal principles into domestic legal systems. Of relevance to this panel, participants in the workshop on "Information Infrastructure" encouraged the OAS InterAmerican Telecommunications Commission (CITEL) to accelerate its work in contrasting and comparing the different legal systems impacting each nation's telecommunications environment in

The panelists outlined recent developments regarding the harmonization of trade and commerce laws in Latin America and discussed the relation between the level of commercial integration and the level of legal compatibility.

The profound differences in the civil code and common law systems and methods of doing business in each, make it difficult, for a lawyer accustomed to written codes, to harmonize commercial laws with the common law system whose main source of law is judicial precedent.

While the strength of civil law resides in the logical development of general concepts, the strength of common law is in the manner in which it deals with specific cases. In view of these differences, the harmonization process must lead to objective standards and to understandings of principles and concepts, if not necessarily common wordings.

Given the volume and speed of trade in goods and services associated with free trade, the degree of uniformity of substantive law and practice (includingdocumentation)among trading partners 65

different countries -- is developing as increased economic integration occurs in the hemisphere and through international mee tings of lawyers, joint ventures and increased foreign investment by u .S. companies . If insufficient attention is paid to the need to educate ourselves about diverse cultures an effort to establish uniform commercial rules will not remove the conflicts that will arise from cultural differences. National and regional law centers with significant research , educational and information components devoted to the unification and harmonization of trade, environmental and labor laws are worthy of support as bridges for the inevitable cultural gaps . Such centers exist in Canada, Mexico and the United States and others are being created in Central and South America .

The National Law Center for Inter-American Free Trade, which presently acts as a secretariat for the other centers, offered to coordinate proposals resulting from this meeting as well as to distribute studies and reports on harmonization efforts . It was also noted that the OAS Inter-American Juridical Committee includes in its charter the purpose of "the study of the legal problems concerning integration of the developing countries of the continent, and the possibility of harmonizing their laws inasmuch as it is convenien t," and that therefore it too could have a role in the harmonization process .

order to understand the systems' interrelationship to trade and information issues.

Harmonization should be approached both from the "top down," i.e ., through model laws and conventions and from the "bottom up, " i.e., through the development of commercial customs that reflect a harmonization of business concerns.

Attitudes toward commercial law, including the ability of private parties to create their own substantive and procedural rules , and the method of formulation and interpretation of rules, vary widely and are not based on generally-recognized international standards; total uniformity of these attitudes would best facilitate commerce.

Objective standards found in the NAFTA should be observed by Western Hemispheric countries to prepare for the Free Trade Area of the Americas (FTAA), including observance of the principles in the environmental and labor side accords . Some participants perceived U.S. litigiousness as inconsistent with the goal of a FT AA and a possible non-tariff barrier .

Harmonization of laws is a movement towards accommodation of different legal systems and of cultural differences between societies.

"Unconscious harmonization", -- i.e ., numerous avenues of influence occurring between groups in

SUMMARY OF PANEL 2: "COMMERCIALDISPUTE RESOLUTION"

This panel discussed the importanceand use of arbitration, mediation, conciliation and other alternative dispute resolution (ADR)mechanisms for settlementof private internationalcommercial disputesin the hemisphere,and the impedimentsto the use of such ADRs.

commercial sector. Such governments have had to give various assurances to private investors, such as including arbitration provisions in contracts or laws. However , this attitude toward arbitration is relatively new for Latin Am erican governments, which have been traditionally hostile to arbitration.

Furthermore , many laws, regulations and judicial precedents must be changed before foreign investors have clear rules with respect to arbitration.

In addition, judges, lawyers , government bureaucrats and other key actors must change their attitudes and become more accepting of arbitration. As an example of this, Peru has added an article to its constitution clearly stating that arbitration is acceptable. Commercial dispute settlement mechanisms must be objective ,

Investors need modern, stable, predictable and efficient judiciaries and legal systems. While the process to modernize legal systems occurs, the use of alternative dispute resolution may be especially useful to address investors' concerns and promote commercial integration.

In the last few years, Latin American governments have moved from being monopoly commercial actors to being investment partners in, or solely regulators of, the

66

transparent and fair.

International financial institutions, chambers of commerce, universities and conferences such as this one can play a positive role in this long process.

alike and to ensure adjudication of trade disputes by objective criteria, free from political influence .

The United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention) and the Inter-American Convention on International Commercial Arbitrationare similar on various points, including the public policy defense. The issue is how to implement these into trading relations, for example, in contracts, joint ventures and limited liability agreements. All of these should have arbitration clauses that specify all practical considerations such as the method for selecting arbitrators, choice of law and fora, and allocation of arbitration costs .

Major arbitration associations are too expensive for all but big companies. Furthermore, both the OAS Inter-American Commercial Arbitration Commission (IACAC) and the International Centre for the Settlement of Investment Disputes (ICSID) are under-utilized. As a result of the Summit of the Americas, a non-profit, regional commercial dispute resolution body in Miami, with ties to the IACAC and the American Arbitration Association, is renewing its efforts to promote ADR in the hemisphere.

The importance of law to integration must be emphasized continually. There is a need for more education throughout the hemisphere on the different legal systems, and national law center s that use both the "top down " and "bottom up" approaches should be organized to assist in this educational process. Countries from the Western Hemisphere should establish and coordinate the work of specialized national groups to make proposals for addressing priority areas identified at this workshop, including the use of alternative dispute resolution . The OAS Inter-American Juridical Committee, the National Law Center for Inter-American Free Trade and similar institutions could coordinate work sent to them by these countries. It is necessary to increase exchange programs in law schools in the hemisphere and to establish a Fulbright-type hemispheric educational fund to promote such exchange programs. Latin American and Caribbean law schools should develop programs for U.S. and Canadian law students and attorneys to study local , civil law systems, and U.S. and Canadian law schools should place greater emphasis on the study of Latin American and Caribbean law.

It was suggested that Latin American governments may have been influenced by those features of U.S. law and practices that may tend to restrict trade and protect domestic producers against foreign competition. Trade laws throughout the hemisphere should be reformed to remove or mitigate protectionist features, to ensure equal treatment for domestic and foreign competitors

It was suggested that a regional arbitration body may be desirable.

Structures from existing conventionsand the NAFT A could be elevated into a permanent hemispheric committee for developing model rules for arbitration procedures . For example, the OAS IACAC could be strengthened or combined with relevant Inter-American Development Bank bodies to execute this work.

Conclusions

67

PanelMembers Panel One:

"Integrati.ngCommercial Law

Panel Two: "CommercialDispute

Systems"

Settlemen .,, Ginger Lew (Moderator) General Counsel Department of Commerce United States

Ginger Lew (Moderator) General Counsel Department of Commerce United States

Roberto DaĂąino Partner Rogers & Wells United States

Jose Alexandre Tavares Guerreiro Professor of Commercial Law University of Sao Paulo Law School Brazil

James M . Lyons Partner Rothgerber , Appel, Powers & Johnson United States

Boris Kozolchyk Director National Law Center for Inter-American Free Trade United States

Hernan Perez Attorney EMELEC (Ecuadorian Electrical Company) Ecuador

Alejandro Ogarrio Mexican Representative to UNCITRAL Partner, Bufete Ogarrio y Dias Mexico

Edgard Romero Nava President FEDECAMARAS Venezuela

Stephen T. Zamora Director International Law Institute University of Houston Law Center United States

68

FUNCTIONAL \VORKSHOP III: "SMALL AND MEDIUM-SIZED BUSINESSES IN A HEMISPHERIC 1ARKETPLACE"

Summaryof Discussions Panelists emphASIZED the importance of Small and Mediun-sized Enlerprises (SMEs) to the process of job creation and hemispheric integration. The discussionsexamined the impedimentsSMEs are facing in today's marketand identifiedpotential solutions that could be implemenJedby both the private and public sectors, individually and collectively through the Free Trade Area of the Americas (FTAA). Panelists urged that the FreeTradeArea of the Americas must offer SMEs the capability to effectively compete and that governments must create an environment conducive to growth of SMEs. SUMMARY OF PANEL 1: "GENERATING GROWTH IN THE SMALL AND MEDIUM-SIZED BUSINESS SECTOR: CULTIVATING JOB CREATION AND COMPETITIVENESS" Mr. de la Calle openedthe panel by urging that

Cooperation: governments must work in partnership with the private sector to provide services and develop assistance programs for SMEs;

negotiators of the Free Trade Area of the Americasshould seek to provide the capability and the environment to enable micro and small and medium-sizedenterprises (SMEs) to integrate into He production and commercial processes. identifiedthe following factors that will contribute to this effort:

Creation: Emphasis on innovation; Capital: Mechanisms to access capital; Continuity: Provide public and private sector services that are sustainable and provide continuity. For example, one year pilot programs cannot solve the deeprooted needs for education and financing.

Certainty in access to markets; Technological selection: support the creation and transfer of technology and facilitate strategic alliances to bring more SMEs into the production process.

Mr. Pizani argued that it is necessary to agree on Economies of scale in financing, in access to inputs and in specialty segments of the production process;

the definition and criteria of SMEs. The concept of SMEs should include not only manufacturing, but also services and trade. Programs and assistance targeting SMEs are important, but without a supportive business environment, both internally and through the creation of the Free Trade Area, SMEs will not prosper.

He emphasized that access to technology is critical. If SMEs are to survive and remain competitive as markets open, they must make better use of communications and new production techniques to keep pace with larger companies.

Access to competitive services to reduce production costs.

Mr. Lizarraga spoke about existing assistance programs and recommended that mechanisms to support SMEs should take the following factors

into account: Coordination of the numerous and varied

Ms. Pulley spoke about the recent White House Conference on Small Business, highlighting

assistanceprograms;

69

guarantee loans to SMEs that . fi . cannot obtam mancmg on reasonabl . terms through normal lendmg channels¡ , and

landmark legislation that has been enacted as a result of past conferences in support of SMEs such as:

provide business assistance.

The Regulatory Flexibility Act, requiring government agencies to analyze the impact of proposed rules on small businesses, and to lessen the burden when possible;

and

management

Mr. Valley urged that it is necessary to

uce business risks for small and medium .

-sized businesses. He offered a number of solutions . such as encouragmg Western Hemisphere ' ere governments to prov1 e tax breaks for small and medium-sized exporters. He also proposed the creation of a Center for Small Business Financin and Development, to be located in Trinidad and Tobago, to facilitate the development of SMEs throughout the hemisphere.

The Paperwork Reduction Act, designed to cut unnecessary paperwork from the Government; The Small Business Innovation and Research Program, which has provided over $4 billion in Research and Development funds that formerly went to big business;

Mr. Camillo dos Santos outlined the many Small business owners in the June Conference proposed major changes in pension laws and regulations to make it easier for SME owners to offer retirement savings plans to their workers.

training programs that the Small Business Association of Brazil offers entrepreneurs. He recommended that assistance efforts for SMEs should focus on: improving basic skills;

Pulley acknowledged that the government has an important role to play in supporting and assisting the growth and development of SMEs by filling in gaps in the marketplace in the following areas:

improving management education; providing increased access to information;

create an environment that is conducive to SMEs by making government regulations easy to understand, easy to comply with, remedial rather than punitive, and to allow corrections;

assisting in the search for international markets .

SUMMARY OF PANEL 2: "HEMISPHERICINTEGRATION: REMOVING EXPORT IMPEDIMENTSFOR SMALLAND MEDIUM-SIZEDBUSINESSES11

Mr. Ritter's opening remarks focused on the

He pointed out that the import tax structure canbe another protectionist policy because it drastlcally increases prices for imported goods, thus forcing consumers to buy domestically produced products.

With a lower import tax structure, governrnents . wou would collect more taxes, consumpuon . mcrease and companies would not be compelledto by bribe officials or falsify invoices. He concluded

protectionist tendencies of some Latin American governments. He recommended that all countries adopt a national treatment agreement similar to that in NAFTAA, because protectionist activities benefit only one local producer and a few officials, in the form of bribes, leaving consumers to buy inferior products at dramatically inflated prices.

70

emphasizing that any governmentally imposed impedimentmakes it difficult for small businesses to pursuetheir sales, since they lack resources of their larger competitors. If markets were free of these impediments, both tax revenue and employment in the Western Hemisphere would increasedramatically.

competitive with rates given to large corporations; Coordinate tax policiesamong counties to apply indexed tax rates to SMEs both in value added taxes or capital tax; And , education programs are excrernelly important to maintain a technological

Ms. Higgins de Ginnata spoke about three parameters that must be developed in order to supportsmall and medium-sized businesseswithln the hemisphere: ethics, justice and equity. She stressed that small and medium-sizedindustries can obtain advantages from market liberalizationand globalizationas long as host governments facilitate and do not hinder their efforts. She proposed the followingtenets and recommendations:

cutting edge.

Mr. Duggan acknowledged that .S. assistance programs are not as strong as our European and Japaansecompetitorsand that U.S. exporters tend to be short-sightedwhen conducting international trade. Obstacles that U.S. companies face when conducting business include: lack of sufficient corporate data, inability to compete in numerous business deals due to limitations imposed b the ForeignCorruptPractices Act, and their own lack of knowledge of the language and the culture of Latin America. Solutions for the first two problems could be accomplished through USTR working with its Latin American counterparts to developa transparenttrading system and a uniform standardof ethics. A solutionto the latter problem could be accomplished through an Export ManagementCertification Program, which would develop a recognized body of knowledge for exportersand a standardizedapproach for teaching necessary exporting skills.

Countries must support, promote or stimulate the development of SMEs; Promote flexible contracting rules so that SMEs can hire employees without generatingoverwhelmingobligations. For example, SMEs should be allowed to hire personnel for a period of two years without generating obligations or indemnificationsor application of the joint labor contract; Allow transactions, in which both the importer andexporter are SMEs, to occur without payment of export or import overcharges or customs duties, thus facilitating competition with large corporationsandincreasing the number of hemispheric-wide transactions;

Ms. Fitz-Pegadoinformedthe audience that in the United States, the most significant obstacles that small and medium-sized business face when exportingare export "know how," access to trade finance, and access to information on market opportunities. She described how the U.S. Department of Commerce and the International Trade Administration'sCommercial Service assist small businesses to overcome these problems and exportsuccessfullywithin the hemisphere. Publicprivatesector partnerships such as District Export Councils in the United States and a cooperative relationship between the U.S . and Foreign Commercial Service, the U.S. Small Business Administrationand the Small Business Association of Brazil are fundamental building blocks for

In order to achieve steady growth, promote local laws and international agreements that support the creation of andinvestmentin small and medium-sized

enterprises; Promote the creation of non-subsidized financing sources for this sector, through medium and long term credits,

71

supportingSMEs. Additionally,the Commercial Service is opening Export Assistance Centers throughout the country in conjunctionwith the Small Business Administrationto provide "onestop-shop" international trade counseling and services for small and medium-sizedbusinesses.

She encouraged the panelists and audience to develop a concrete plan of action for increasing cooperation between private sector organizations and the public sector to better support small businessesthroughoutthe hemisphere.

Fitz-Pegado introduced the Department of Commerce's new publication, TradeAmerica: Toward Hemispheric CommercialIntegration,a framework of how the Department will better serve the U.S. business community, while supportingshared hemisphericgoals. Specifically, the U.S. Commercial Service posts within the WesternHemispherehave developedsub-regional trade development strategies, focusing on the regionalinfrastructure needs commonwithineach sub-region. These five sub-regions (Andean, Caribbean, Central America, MERCOSURplus Chile, NAFTA) address infrastructure requirements to support the broader Hemispheric goals of commercial integration and environmentallysound development. She closed her remarks by stating that in many Latin American countries, a small number of large companies dominate the economies. She urged that the private and public sectors should encourage these dominant companies to incorporatesmall and medium-sizedenterprisesin their businessactivities.

Mr. Garcia focused on the differences in the definition of small businessand the technological and educationaldisparitiesbetweensmall business in Honduras and the United States. Small businesses in Honduras may have as few as 5 employeesand do not have access or the abilityto utilize modern technology such as office computers, and on-line informationsystems. He asserted that this places Honduran SMEs at a disadvantage when competingwith U.S. or other nation's exporters. He strongly recommended that all Latin American governments work

together to secure Inter-American Developrn .

Bankfundingto prov1 e compre ens1ve training . . db . g to small and medmm-s1ze usmesses.

Clark discussed three export-related recommendations that were_adopted by the 1700 delegatesduringthe June White House Conferenc on small business.

First, Congress and the President should authorize and encourage the Export-Import Bank of the United States and the Small Business Administration to sponsor revitalizedfundprograms designed to providepreexportfinancing,unsecured working capitalloans, and transaction-based loans and pooled loansrather thanbalance sheet and asset-based loans. Access to finance is one of the primary deterrentsfor small business exporters in ¡ the United States.

Second, the UnitedStatesgovernmentshouldstrive to further strengthen intellectual property rights.

Third, preserve the International Trade Administration(ITA). ITA provides vital market research to SMEs and introduces these firms to overseas markets through a variety of programs.

ITA alsoprovidesthe business link to Government throughits 26 AdvisoryCommittees, includingone dedicated to SMEs, and through the 51 District Export Councils throughout the United States.

Moreover, ITA has developed a unique and innovative pilot program called the National MentorshipProgram, which matches experienced export companies with companies that are beginningto export.

Clark's recommendationsfor removingbarriersto HemisphericIntegration were: replicate someof the International Trade Administrations's programs, establish public/private partnerships such as District Export Councils, develop mentorship programs, and establish a public/private sector clearing house for tradeand commerce programs.

The commentsfrom the audience were as follows: Over 40% of small business in Latin America feel that they are disadvantaged in the abilityto competewith similarfirms ¡ the U.S. This comment relatedto their in

72

access to capital, skilled and trained workers and information.

SMEs. Governments should attempt to minimize regulations and make them as easy to understand and comply with as possible.

U.S. sanitary restrictions employed by the FDA are, at times, too strict and are viewed as a non-tariff barrier used to protect U.S. competitors.

Promote the technology.

The Americas need to develop a central clearing house to increase access to trade related information and two-way trade opportunities that all companies in the Hemisphere can access.

use

and

transfer

of

Reduce the amount of regulations and export documentation needed through the Free Trade Area of the Americas.

Cnoclusinos

Seek Inter-American Development Bank funding to implement training programs for SMEs throughout the Hemisphere .

There was broad agreement that the nations of the hemisphere should support the development of small and medium-sized businesses to ensure strong economies and high levels of employment.

Additional conclusions were:

Public sector and private sector organizations should develop partnership programs within the hemisphere to stimulatethe flow of information and ideas to support SMEs.

Promote national and FT AA rules that stimulate the consolidation and growth of

Promote access to finance in competitive conditions.

73

PanelMembers Panel One: "Generating Growth in the Small and Medium-Sized Business Sector: Cultivating Job Creation and Competitiveness "

PanelTwo: "HemisphericIntegration • removin ExportImpedimentsfor Small and Medium Business "

Luis de la Calle (Moderator) Director of NAFTAA Office Embassy of Mexico

Thomas Ritter (Moderator) President Inter-Continental Business Associates, Inc. United States

David Lizarraga President and CEO TELACU United States

Joyce Higgins de Ginnata President Chamber of Small Industries of the Guayas Ecuador

Leonardo Pizani Executive Director FUNDES Venezuela Business Center Venezuela

Martin Duggan Executive Director Small Business Exporters Association United States

Cassandra Pulley Deputy Administrator U.S. Small Business Administration United States

Lauri J. Fitz-Pegado Assistant Secretary and Director General U.S. and Foreign Commercial Service U.S . Department of Commerce United States

Kenneth Valley Trade Minister Trinidad and Tobago

Norman Garcia President Foundation of Investment and Export Development Honduras

Jose Camillo dos Santos Representative Small Business Association of Brazil Brazil

Michael Clark President Atlantic-Pacific Technology United States

74

FUNCTIONAL WORKSHOP IV: A HEMISPHERIC INFORMATION MARKETPLACE"

Summaryof Discussions SUMMARY OF PANEL 1: "PROTECTION OF INTEUECTUAL PROPERTY IN THE INFORMATION MARKETPLACE• The moderator and seven panelists made up the panel on intellectual property rights (IPR) protection.

communicationgroupsand companiesthat promote works must work in partnership with authors.

The informationsuperhighwayis an important part of the cultural revolution underway in the HemisphericMarketplace. A free trade area must give importance to the free circulation of goods and services. The industry producing intellectual propertyproductsis rapidly expanding; intellectual property is a vital element of that business.

Several panelists commented on the need for technologicalmeansto stop and control the theft of intellectualproperty. One commentator noted that encryption alone is not enough. Strong national laws and enforcement is the key to success in preventingpiracy.

Summary of Statements by Panelists The NII and HU (National Information Infrastructure and Hemispheric Information Infrastructure) will have great potential to provide increased access to vast resources of information and entertainment products and services. The potential of the NII and HU will not be realized if those information and entertainment products and services are not effectively protected. All the wires, cables, computers and networks in the world will not create a successful NII and HII if there is no content, and owners of intellectual property will not be willing to put their interests at risk if appropriate systems are not in place to protect their works.

It is of paramount importance to the Hemispheric marketplacethat intellectualproperty products are fullyprotected. Intellectualproperty issues should form an integral part of our hemispheric discussionsand we should continue our discussion on this very important subject. Strong support of intellectual property rights is critical to economic growth.

In the midst of this technological explosion, the establishment of clear domestic and international norms for intellectual property protection is a matter of urgency for all. As several panelists noted, these are tough issues, requiring a responsiblebalancingof the interests of creators in exercising the intellectual property rights of their works and the interestsof users in obtaining access to those works.

This is truly an excitingtime as we begin to realize the educational, social and commercial benefits provided by the information superhighway. It is difficult to imagine the extraordinary wealth of resources that will be within our reach as we expand our links to include a hemispheric, and ultimately a global, information infrastructure.

One of the great challenges that confront us is to expand the flow of information in this new environment while contmumg to provide meaningful incentives for creators of intellectual property. Creators and owners of content are

In dealingwith these issues, we need to ensure that creativegenius is not inhibited, but unleashed.

There must be a commitment to creators to protect the fruits of their labors while at the same time ensuringthat the content of their works will be availableto others. One panelist noted that "the actof creation of a work is magic activity" and that 75

interactive telecommunications network Yet. .

Ina manner which does not mterfere with technical . information Protection and copynght management .

The importance o f openmg telecommunicati ¡ services and infrastructure to competition was also discussed. It was also emphastzed that local software developers and. publishers must have access to investment capita 1 to help develop the growth of collective works produced by groupsof individuals.

greatly concerned with how they will maintain control over the exploitation of their intellectual ¡ property in this new digital environment. It was observed that a combination of legal and technical protection was the only way to achieve this.

Technological innovation is key to controlling the dissemination of intellectual property products.

There is a need to develop a system which tracks and monitors the use of copyrighted works. The countries of the hemisphere should work together to make sure that intellectual property laws are not rendered obsolete by technology.

Summaryof Panelists' Conclusions The benefits of a Hemispheric Information Marketplace are enormous in terms of the consumer products to be offered and the employment opportunities presented. They will, however, be limited in scope without strong protection for intellectual property and harmonization of copyright laws.

Several panelists commented on the need to change the way we approach problems in the age of the digital revolution. The digital revolution will make information more compact, and the public will receive more information that will change our daily lives. Copyright law has to change as well.

We must make sure the rights of creators are balanced with the access of the public to information. Some of the copyright issues which need to be addressed include moral rights, works for hire, first sale doctrine, copyright management systems, distribution of works, to name just a few.

The importance of educating the public about intellectual property rights was also emphasized.

Users of the information superhighway should be educated to respect copyright on the digital highway. This education should take place in schools and will help the public understand at an early age the importance of intellectual property rights.

Universities should be encouraged to improve and strengthen computer science education.

There is an urgent need to provide strong and effective intellectual property protection in the Hemispheric Information Marketplace.

It is necessary to harmonize copyright laws and reconcile the differences between authors rights and copyrights. Harmonization in this area cannot wait until the year 2005. Given the rapid advances in technology, it is important for us to work together now to harmonize copyright laws and to take advantage of the many opportunities presented by the information marketplace that will be lost by inaction. A Western Hemispheric group of public and private sector participants should be formedto continue the discussion of these urgent issues and to explore further ways to cooperate on these issues.

Several points were made regarding the need to clarify contract laws to transact licenses in an

Copyright awareness is an important element of a successful Hemispheric Information Marketplace.

76

SUMMARY OF PANEL 2: "OPEN ACCESS TO THE INFORMATION MARKETPLACE"

The moderator and four panelists made up the panel on open access:

(1) In technology, developments are favorable. Compression technology is developing quickly, and the movement is towards a single, common technology, so that a common language for delivery systems appears likely;

Summary of Statements by Panelists Lehman introduced the panel and noted that the subjects of the two panels (intellectual property protection and open access to the information infrastructure) are inextricably linked.

(2) Tension is developing between delivery systems and content providers, especially in the division of rights between these two interests. A consolidation is underway among both these groups. Delivery systems need access to large amounts of good content. If competition exists between delivery systems, then the content provider has more influence.

Valenti affirmed that both panels discussed subjects indispensable to the future of the content providers.

He saw two primary roles for government: (1) guaranteeing access to the information infrastructure, and (2) preventing monopolies from stifling access. The government's role is to be an umpire, in assuring that the game is played fairly.

(3) Competition will continue to develop between global and local product. Keeping out foreign product and information is impossible .

Globo' s news channel with 500 thousand subscribers competes against CNN, which has 140 million. But this competition is a challenge , not a threat. Local product has an advantage in its own market,becausemost people want to see their own culture and their own people. Furthermore, in the new world of abundant choice, there is room for both local and global product.

Valenti affirmed the importance of consumer choice. Furthermore, if government avoids overmanagement, prices will be reasonable. Abundant choice is a characteristic of the new global information infrastructure, meaning that consumer choices will be multiplied. Governments should let this growth in consumer choice take place without interference.Imeed, governments will probably be unable to control distribution networks, since transmissions will often come from outside the country.

Advances in technology will permit avoiding increased regulation. For example, in some countries in the past, government control of theater admission prices has led to decay of theaters, and decline in attendance. Yet when prices were decontrolled, theater owners could refurbish their theaters, and the public began to return.

The role of government should not be to set quotas, but to seek ways to encourage local production, such as tax incentives .

Berman stressed that most companies in the recorded music business have foreign linkages, that their business is often global, and that the U.S. industry does not dominate the world recorded music business . The U .S. share of local markets is determined by consumer choice, and varies from 20 percent to 80 percent.

The assertion that U.S. movies damage cultures of The information infrastructure will be developed only in response to creators and service providers on one side and consumers on the other. The role of governments is to adopt rules to promote free and open competition. Governments should use incentives to encourage production of diverse cultural materials, rather than artificial restrictions

the recipient countries is not true. "No one is more respectful of cultures than I. I believe that a country's culture is too deeply rooted for movies to havethepowerto change it," said Valenti.

Pecegueiro exploredhow open access would work in practice. He noted three important points:

77

on consumer choice, such as quotas. "I say 'yes' to government sponsorship of the arts, but 'no' to barriers," said Berman.

(1)

IPR protection is essential in North ¡ . Thee need is for and South Amenca one clear-cut set of rules now.

In the IPR area, governments should act to ensure a high level of protection. IPR is not just a U.S. issue, since all creators are hurt by poor IPR protection, and good protection serves the interest of all creators. Indeed, good IPR protection stimulates production by local artists and contributes to broader consumer choice.

(2)

Lessregulationon the part of government 1s necessary.

The temptation for government is to regulate, but free compet1t1on1sbest. Everyone, including consumers, will benefit.

Proposalfor the Audience Manuel Ugueto, President of Promexportof Venezuela,proposed that governmentsencourage the use of telecommunicationsand information technology to make more easily availableto all interestedpersons informationrelating to business and foreign trade, including business intelligence and trade contacts.

Cisneros described the importanceof open access for new and existing telecommunicationservices.

He emphasized the importance of new and advanced technologies to enter into emerging markets.

As an example he cited his new association with Hughes Communicationsand other companies from Brazil and Mexico to provide DirecTV to all Latin America and the Caribbean, beginning in 1996. DirecTV is a satellitedelivereddirect-to-hometelevisionservice developed by Hughes in the US. He explained how U.S. companieswith leading technologiesare entering into associationswith local companiesin other regions of the world to providetheir products and services. Leading-edge technologiessuch as DirecTV "could change the (Latin American) region very fast as they will reach every corner of every country and bring them closer together."

The Latin American market is very large and is in need of new services. Cisneros estimates that subscribers of DirecTV could reach 5 million for the year 2000, while independentsources estimate as many as 15 million. Only open access will allow new technologies to reach new markets, to promote commerce, and to bring people and countries together with one another.

Summaryof Panelists' Conclusions

Content will play a key role in the successful emergence of a Hemispheric Information Infrastructure. Panelists supported¡ open access and protectionof intellectualproperty as essential to ensure that creators will make their content available in the new digital world. Hemispheric representativesshould address these issuesas they work toward hemispheric integration.

The Hemispheric Information Marketplaceoffers enormouspotential to increase consumerchoice.

All panelistssupported open access and cautioned against artificial government barriers limiting consumer choice. There was general supportfor the ideathat diversity characterizes the newworld of digital compression.

Cisneros also called for less regulation by governments. He noted that governments are tempted to regulate, but change comes so fast regulations are soon out of date.

The hemispheric infrastructure will be developed onlyif it responds to the creators and providersof content, and to the consumers.

Panelistsalso noted the need for strongprotection of intellectualproperty and open accessas thebest ways to stimulate development of local products and meet the cultural needs of individualnations Several mentioned that governments shouls

In closing, he emphasizedthese points:

78

consider incentives to increase local production of content, rather than use quoras or other artificial restrictions on consumer choice.

Several panelists noted the importance of technological developments . One panelist noted that a single digital compression technology has emerged as the industry standard and believed this would encourage investment in the new

79

technologies.

Several noted that the new technologies made keeping out foreign produces imposs ible .

One audience participant noted that the infrastructure should provide full economic and commer cial information faciliration efforts , and encour aged these activities .

information acce to to aid trade support for

PanelMembers Panel One: • Protection of IntellectualProperty in the lnfonnation Marketplace•

Panel Two: "OpenAccess to the Marketplace•

Bruce A. Lehman (Moderator) Assi stant Secretary of Commerce and Commissioner of Patents and Trademarks United States

Bruce A. Lehman (Moderator) Assistant Secretary of Commerce and Commissioner of Patents and Trademarks United States

Hon. Ron Brown (Co-chair) Secretary of Commerce United States

Jack J. Valenti (Co-chair) President Motion Picture Association of America United States

informatio

Antonio Mille (Co-chair) President Instituto Latino de Alta Technologia Informatica y Derecho Argentina

Alberto Pecegueiro Director General Globosat Brazil

Al Teller President MCA Music Entertainment Group United States

Jason A. Berman Chairman and Chief Operating Officer Recording Industry Association of America United States

Carmen Quintanilla Director Derecho de Autor Mexico

Gustavo A. Cisneros President and CEO Cisneros Group of Companies United States

Jose Antonio Rios President and CEO Galaxy Latin America Venezuela Kenneth Wasch Executive Director Software Publishers Association United States Jose Maria Fernandez Unsain President General Society of Mexican Writers Mexico

80

FUNCTIONAL¡woRKSHOP V: "PRIVATESECTORFINANCING: INFRASTRUCTURE AND PRIVATIZATION"

Summaryof Discussions Theprivatesectorfinancingworkshopfocussedon the continuingneedfor hemisphericgovernmentsto promote privatizationand liberalizationof trade and investmentas criticalstepsfor attractingforeign private capital andfor expeditingeconomicintegrationof the hemisphere. Someof the workshoprecommendations--such as continuedand sectoraldiversificationof privatizationefforts, developmentof capitalmarketsthroughpension and insurance reform, and improved reapportionmentof risk between project developers, multilateral developmentbanks, and regionalgovernments--were also echoedin otherForum workshops(e.g., Energy workshop).

The financing workshopconsistedof two panels which dealt with "TheRole of Governmentsin Attracting Private Capital to InfrastructureFinancing"and with "The Role of Private Financingin Infrastructure funding on private capitalflows and Projects." Bothpanelsstressedthe criticaldependenceof infrastructure the relatedrequirementincumbenton governmentsto createinvestmentenvironmentsthat can attractprivate investment.

SUMMARY OF PANEL 1: "THEROLE OF GOVERNMENTSIN ATTRACTINGPRIVATE CAPITAL TO INFRASTRUCTURE FINANCING" The panel unanimously stressed the continuing need for hemispheric governments to promote privatizationand a businessenvironment conducive to trade and investment. The panel also recognized that financially overburdened governments in Latin America are increasingly unableor reluctantto provide sovereign guarantees to infrastructure projects and that capital provided by foreign government credit agencies and multilateral banks is insufficient to keep up with the growth in the demand for project financing.

As a result, the implementation of future infrastructure projects will increasingly become dependent on inflows of private capital from abroad.

includingexpandeduse of contract-based financing techniques (e.g., limited-recourse and nonrecourse financing, debt/equity swaps), as well as the speedy development of domestic capital markets and related instruments with long-term maturities which are able to attract foreign investment.

The need to link domesticsocial development goals with new privatizationand market-driven economic programs in poorer economies was raised by Finance Minister Rey of Haiti. In rebuilding Haiti's economyand creating a stable environment for business, her government must concern itself with the social implications ensuing from public sector divestitures and the adoption of other market-orientedinitiatives. These problems range from ensuring that divestiture by government monopolies may not just result in the creation of foreign-dominatedprivate monopolies, to fostering a rapid upgrade in the country's professional expertise, to implementing efficient transfer

The panel noted that a shift from public to private risk bearing requires hemispheric governments to foster stable, adequately regulated macroeconomic environments which can gain foreign investors' confidence.

It also requires accelerated development of expertise in the private financial services sectors of Latin American countries, 81

hemispheric governments concerning the type and degree of assumable nsk related to future infrastructure projects; educate private and public IC sector entities on each other s needs and concerns related to infrastructure financmg ; study ways to enhance cooperation between export credit agencies , multilateral development banks, and commercial banks; and develop recommendations which would address private investors' concerns about investing in Latin America .

programs of privatization-derived revenues to the funding of social programs.

I

To expedite adoption by hemispheric governments of processes that would promote cross-border capital flows, the panel proposed the creation of a public/private sector group that would operate within the structure of the Hemispheric Forum and fulfill one or more of the following functions: develop and recommend guiding principles to

SUMMARY OF PANEL2: "THEROLE OF PRIVATE FINANCING IN INFRASTRUCTUREPROJECTS" privatized infrastructure projects in Latin America have been already targeted by foreign investors securing private capital flows to less viable infrastructure projects will require additional legislative and regulatory reforms, as well as microreforms aimed at standardizing hemispheric contractual management procedures that would address problems such as contract compliance and arbitration issues. Indeed , privatization policies and initiatives in the region have out paced regulatory reforms needed to allay investors' risk concerns.

With estimated hemispheric annual requirements for infrastructure capital in the $60 billion range and actual capital flows averaging a third of this amount, the need for supplementing official with private fmancing and developing creative funding mechanisms was again emphasized. It was noted that inadequate financing is a non-tariff barrier to trade--a continuing challenge to be overcome by U.S. firms doing business in Latin America and a reason for stalled economic development in the region.

The panel concurred with the previous panel's observations about the need for governments to improve macroeconomic stability in hemispheric markets, adopt regulatory and legislative measures that would reduce foreign investors' risks, develop viable capital markets through pension and insurance reforms, raise the efficiency of government agencies responsible for overseeing infrastructure development, and improve through education the ability of domestic banks to manage capital flows.

In the view of one panelist, proposed lower Congressional appropriations to multilateral banks represent another threat to the competitiveness of U.S. firms bidding for infrastructure projects.

A major concern of foreign commercial lenders is the possibility that local project developers may be unable to service long-term debt due to adverse actions by host country governments . Such concerns have inhibited commercial lending to the region unless the lending is fully covered by export credit agency guarantees. One panelist suggested that debt-service performance risk related to infrastructure projects be hedged through a joint pledge by regional governments to protect the projects' assets. The panel concurred in urging credit agencies, multilateral banks, and regional governments to jointly develop new financing approaches and insurance initiatives that would alleviate private investors' and commercial banks' risk exposures, thereby attracting new capital to infrastructure projects.

It recommended the creation of a public/private working group to study and recommend such initiatives.

Current inefficiencies in the use of capital for infrastructure projects by public agencies, local project developers, and local banks was also raised as an important reason for the stalling of many projects. Since a majority of the more profitable

82

functional public/private sector group be created und er the auspices of the Forum to explore how export credit agencies and multilateral banks could join tly cooperate in providing private investors insurance and/or guarantee cover for a range of pol itical and comme rcial risks in Latin America.

The group is to also study and make recommendations to governm ents through the Forum on innovative appro aches that could enable both public and private lenders and investors to jointly hedge project-related risks in the region and thus broaden the current base of funding available to Latin America .

Conclusions The panelists recognized that the Forum concept is a useful venue to advance hemispheric integration , gain valuable inputs from the business community across the hemisphere , identify business facilitation issues, and foster public-private partnerships .

They also recognized that hemispheric integration is contingent on the simultaneous creation of free capital flow zones along with free trade zones.

The panels recommended that, in view of the decreasing extension of sovereign guarantees, a

83

PanelMembers Panel One: "The Role of Governments in Attracting Private Capital to Infrastructure Financing"

Panel Two: "The Role of Private Financing.

Jnfrastructure Projects" in

Rita Rodriguez (Moderator)

Enrique Iglesias (Moderator) President Inter-American Development Bank

Board Director Export-Import Bank United States

Roger A. Dorf President AT&T Network Systems United States

H.E. Ubaldo Scavone Minister of Industry and Commerce Uruguay

Darin P. Narayana Executive Vice-President Norwest Bank International United States

H.E. Marie Michelle Rey Minister of Finance and Economy Haiti

Armando Castelar Board Director National Bank for Social and Economic Development Brazil

Dr. Carlos Eduardo Sanchez Secretary of Trade and Investments Ministry of Economy, Public Works and Services Argentina Alfredo Volio Board Director National Bank of Costa Rica Costa Rica

Ashoka Mody Principal Financial Economist World Bank

84

FUNCTIONALWORKSHOPVI: "PREPARINGOUR WORKFORCEFOR THE AGE OF COMMERCIALINTEGRATIONAND HEMISPHERICFREE TRADE" Summaryof Discussions Thesuccessof the processof WesternHemispherecommercialintegrationandfree trade -- that will culminate withthe creationof a Free TradeArea of the Americasby the year 2005-- dependson workplaceissues such

as worker skills, labor-managementcooperation,and labor standardsthat affect the productivity of the workforce.Theseworkplaceissues,in tum, havealsoan importantbearingon how the benefitsof commercial integrationand hemisphericfree trade are distributedthroughoutthe laborforce.

SUMMARY OF PANEL 1: "SKILLSDEMANDEDBY THE ECONOMYOF THE FUTURE" Education is the most salient challenge facing the Americas. There is a large basic educational deficit in the hemisphere that requires substantial invesnnents in human capital.

Many of the jobs that are being created by the economies of the Western Hemisphere tend to be 1 low quality -- low wages and benefits.

Basic education and training has traditionally been the responsibilityof governments in most countries of the hemisphere.

The demand for educated and well trained workers is increasing rapidly in the dynamic global economy; such demand is projected to continue to increase into the 21st century.

. This is changing, however, because of 1) the insufficiency of public financing for education; and 2) the more active role being played by employers in workforce training.

In a rapidly changing world, uncertainty is a permanent concern. The skills of today will not be the skills of tomorrow. Many of the jobs that exist today will disappear or be dramatically transformed.

Closer cooperation between the public and private sectors -- both labor and management -- in education and training is essential in order to prepare the workforce of the future and reap the benefits of commercial integration and free trade .

Changes in the demand for skilled workers result from several factors, principally technological change, more integrated and flexible production processes, and increased international trade.

Workers also have a responsibility for their own education and training.

Workers and their representatives must accept the reality of continuing education and training throughout their working lives.

Demand is growing for workers with skills and knowledge of teamwork, problem solving, The communication, and quality control. marketplace in most countries, however, is deliveringan insufficient supply of such workers.

Educational systems in the hemisphere have tended to be very structured . But flexibility is what is needed today .

1

Mr. Jose Antonio Guzman disagrees with this

point.

85

The primary responsibility of the government . . d d . n in the area 1s to e ucate an tram the poorest and most disadvantaged segments of the population.

Adversarial labor-management relations and mutual suspicions must be overcome in order for labor and management to work together in preparing the workforce of the future.

SUMMARY OF PANEL 2: "ROLEOF WORKPLACEPRACTICESIN ENSURING THAT THE BENEFITS OF ECONOMICINTEGRATIONARE WIDELYDISSEMINATED" allows them to pay higher wages, which in tum helps to distribute the economic benefits of economic integration more broadly .

Productivity is key in determining competitiveness and which companies and countries will benefit the most from the process of hemispheric economic integration.

The successful Varga enterprise in Brazil was identified as a notable example of the implementation of high-performance work practices: it engages in continuous training, has a very high employee retention rate , encourages the use of teams, shares information on company goals and strategies with its employees, rewards workers for exceptional performance, practices democratic management2, and encourages employee empowerment. In addition, it has contributed to the development of new entrepreneurship as well as to a steady decrease in the high school drop out rate of the community where it operates.

Sharing the fruits of productivity gains with workers tends to increase worker motivation and promotes further productivity gains.

Workers are also consumers. As their wages and income rise, they will have the ability to purchase more products and services and stimulate national economies.

A growing number of firms throughout the hemisphere is recognizing the need to adopt workplace practices in which workers are seen as assets to the enterprise rather than merely costs.

Observance of these non-adversarial, enlightened labor -management practices can contribute significantly to the success of hemispheric economic integration.

More companies are realizing that it is in their best interest to adopt innovative human resource and workplace practices and standards such as skills trammg, continuous learning ("turning the workplace into a virtual classroom"), information sharing, employee empowerment , flattened organizational structures, and win-win labormanagement partnerships -- as a means to deliver high quality, low cost products and services that meet the demands of their customers .

A diverse workforce is another feature of companies that implement high performance work practices. Diverse workforces tend to be more creative. To the extent that a diverse workforce replicates the make -up of the customer base it services, this is very positive for business.

Cooperative labor-management relations contribute to the enhancement of economic efficiency , productivity, and more equitable wage distribution.

Adversarial labor-management relations in the long run serve neither workers nor employers .

Conclusions Commercial integration in the Americas is already a reality .

Firms that have implemented high-performance work organizations tend to train workers extensively and achieve higher productivity. This

2

Mr. Jose Antonio Guzmlmfinds "practices democratic management" extremely vague.

86

The economies of the Americas need to grow and integrate. To be able to achieve the benefits of integration, these economies must have a qualified labor force. Training can also help in attaining a better distribution of income and provide opportunities for upward mobility .

Workplace practices that create better jobs are good for workers and businesses . Better job s lead to better business results .

The International Labor Organization is the premier international organization that addresses labor standards issues.

Countries of the hemisphere must meet the challenge of educating and training the workforce of the future, a monumental task that will require close cooperation and shared financial responsibility between the public and private sectors.

The interest generated by the Denver Workshop on the "Role of Workplace Practices in Ensuring that the Benefits of Economic Integration are Widely Disseminated" suggests that further discussions among governments, employers and workers on workplace issues in the context of closer hemispheric economic integration at future 4 hemispheric gatherings are desirable and useful .

A well-trained and productive workforce will permit countries of the hemisphere to benefit more fully from the fruits of economic integration.

It is evident that there is a vital need to share It is imperative that workers and management engage in a continuing dialogue at the enterprise level in order to increase productivity and quality.

information on workplace issues in the hemisphere in the context of closer economic integration.

Distribution of these summary notes and conclusions to interested organizations and other fora will contribute to a better understanding of the relationship between workplace issues and the process of hemispheric economic integration.

Certain workplace practices and standards can promote the wider dissemination of the benefits of commercial integration andhemispheric free trade.

Thus, workplace issues should be taken into account by the architects of the Free Trade Area of the Americas. 3

Mr. Guzman notes the following: • However, this does not mean that labour standards and conditions mustbe equalizedbetweendifferentcountries. Labour standardsare nationallydetermined,and this should

Mr. Guzman notes that: • further discussion s on workplace issues in the context of closer hemispheric economic integration at future hemispheric gatherin gs may be desirable and useful ."

remainthis way."

87

Panel Members Panel 2: "Role of the Workplace Practices in Ensuring that the Benefits of Economic Integration are Widely Disseminated"

Panel One: "Skills Demanded by the Economy of the Future 11 Hon. Joaqufn F. Otero (Moderator) Deputy Under Secretary for International Affairs U.S. Department of Labor United States

Hon. Joaquin F. Otero (Moderator) Deputy Under Secretary for International Affairs U.S. Department of Labor United States

H.E. Jorge Arrate Mac Niven Minister of Labor and Social Welfare Chile

Hon. Edmundo Gonzales Deputy Assistant Secretary for the American Workplace U.S . Department of Labor United States

Luis Anderson General Secretary Inter-American Regional Organization of Workers (ORIT)

William Doherty Director American Institute for Free Labor Development United States

Jorge E. Mattoso Professor Centro de Estudios Sindicais e de Economi a do Trabalho Universitara de Campinas Brazil

Beatrice Rangel Mantilla Vice President , Corporate Strategies Cisneros Group of Companies Venezuela

Jose Antonio Guzman President Confederaci6n de la Producci6n y del Comercio Chile

John Scully Colorado Vice President US West Communications United States

88

PlenaryRemarks WesternHemisphereTradeand CommerceForum Denver, Colorado July 1-2, 1995

Opening Remarks Hon. Ronald H. Brown, U.S. Secretary of Commerce Hon. Federico Pena, U.S. Secretary of Transportation Ambassador Michael Kantor, U.S. Trade Representative July 1, 1995

Remarks by The Honorable Ronald H. Brown Secretary of Commerce, United States of America July 1, 1995 Good morning, and welcome to this historic gathering.

We know that freer trade brings greater prosperity .

The U .S. alone stands to create two million more jobs as Latin American incomes continue to climb and U.S. exports increase over the next eight years.

Economic growth in the rest of the hemisphere - currently twice that of Western Europe-- will in turn be fueled by increased U.S. demand for increasingly sophisticated Latin and Caribbean products .

LastDecember, every elected Head of State in the Americas and the Caribbean gathered to embrace the idea of hemispheric integration.

They acknowledged the primary role of trade and commerce in bringing our nations together. And they endorsed a Free Trade Zone of the Americas to further strengthen hemispheric bonds of Commerce and cooperation.

It is not surprising that the private sector is pioneering the integration process.

What is heartening is the enthusiasm with which governments across the hemisphere have embraced your goals and ideals, and have made free market economic policy a cornerstone of our regional foreign policy.

Yesterday, Trade Ministers from throughout our hemisphere met to chart a navigable course toward that Free Trade Zone: to weave NAFTA, MERCOSUR, the Andean Pact and the hemisphere's many multilateral and unilateral market-opening initiatives into a seamless tapestry of trade.

Our embrace of these principles is driven by an understanding of the link between our economic goals and the hemisphere's social and political goals.

Today, it is my pleasure as United States Secretary of Commerce to formally welcome to this city and to the Plenary Session of the Hemispheric Trade and Commerce Forum the men and women who truly began and are still building what has become known as the Miami Process: you, the businessmen and women who have driven the process of hemispheric integration one contract or partnership or investment at a time.

Stable governments make for stable markets.

Nations thrive when an educated and motivated population has the opportunity to fully participate in and equitably profit from a growing economy.

Our environment will be protected when growing prosperity allows families and governments to look beyond immediate needs and plan for a sustainable future.

The Clinton Administration promised to create a new relationship between the public and the private sectors. And this week, we have brought hundreds of private sector leaders from throughout the hemisphere together with trade ministers and government officials, for the express purpose of learning from you how best we might speed creation of a Free Trade Area of the Americas.

As proud as we are at Commerce and in the Clinton Administration of what we have done, we understand that the private sector is and must be the heart and soul of any export strategy . You have already proven that trade agreements are not necessary for business accords .

This forum and the days and nights surrounding it will unquestionably prove a catalyst to new friendships and partnerships, to future trade and further integration .

Hemispheric integration is the bridge that will unite us in creating a hemisphere of opportunity.

93

resources available on-line throughout the Western Hemisphere .

But remember our larger mission: If ministers and governments are to find a course to free trade and integration, it is you who must draw the charts .

But as we take time to explore these issues and areas in depth, we must keep in mind as well the larger picture and our greater goal.

Over two days of conversations and workshops you will have an unprecedented opportunity to help us.

Together, we will inspect, illuminate and deliberate the most difficult and important trade issues our hemisphere faces. We will have a chance to learn firsthand your ideas, frustrations, and priorities with the immediacy and impact only face-to-face communication delivers .

We have come to Denver because hemispheric integration speeds economic growth.

And economic growth means better lives for our people.

Three days from now my country will celebrate its Independence Day -- as our Canadian friends are celebratingtheir national holiday today -- the 219th anniversary of the United States becoming the first nation in the New World to sever political ties with the Old. We set a course that the nations of this hemisphere have followed up until almost the present day.

Then, out of these discussions will be distilled a final report -- a more precise and detailed record of the ideas generated over three days in Denver.

I believe these will prove an invaluable illumination of the options before us.

Today and tomorrow we will focus on sectors or issues of particular importance, including: key sectors like telecommunications and the information technology; sustainable development; intellectual property; legal and regulatory obstacles; and infrastructure finance .

But even as we were all throwing off political ties to the Old World, we still looked there too often for economic and cultural guidance . As the 21st Century approaches we are changing that -- here in Denver this week, across the breadth of this hemisphere a million times a day. We are looking to our neighbors for support, for allies, for economic and political ties contact and for creation of a shared history and a varied but common culture.

The telecommunications sector will receive special notice. The Commerce Department's National Telecommunications and Information Administration is joining with a variety of private sector companies for a series of demonstrations focused on technology's potential to speed integration and economic growth .

As all of our populations grow and diversify and achieve; as the commercial leadership of you in this room carries our hemisphere closer to full integration -- the growing economies and thriving cultures of the Western Hemisphere are coming together to create an era even greater than an "American Century" -- to build a century of the Americas.

America's Healthnet, one of our pilot projects, is a telemedicine program joining Costa Rican doctors and patients with U .S. medical providers.

AgriNet Americas, our second pilot project , is geared toward creating a global marketplace for small and medium-sized companies . Focusing on agribusinesses, AgriNet will make new technologies, market information and other

Thank you for coming . I look forward to hearing directly from some of you, and to creating a profitable and productive day for us all.

94

I

Remarksby FedericoPeiia Secretary of Transportation July 1, 1995 I want to congratulate my colleagues at Commerce, USTR, Labor, and elsewhere m government for their efforts to create an environment in which all nations of this hemisphere-- all nations -- can grow and prosper.

We ought to assist our law enforcement officers every way we can, otherwise all the trade and tourism we're working to develop this week, will be impeded by a few people. I encourage you -don't let that happen.

I am pleased to have been invited to address this conference, because my being here serves to acknowledgethe critical role transportation plays in fostering international trade. Simply stated ... we deliver.

Last November in Tampa I hosted a productive pre-Summit meeting of 12 of our hemispheric transportation ministers. We knew the potential for growth opportunities.

In 10years, we could see an 80 percent increase in air traffic between North America and Latin America... a 40 percent increasein cargo between our ports.

I know it's a tried analogy, but transportation really is the lubricant that makes our system of internationalcommerce run smoothly.

Inefficient and congested transportation systems increaseproductionand distribution costs, lengthen delivery times and make them unreliable, and cause excessive losses and damages. The less efficient our transportation systems are, the less trade there is ... and with less trade, the lesser prosperity.

In 10years, truck traffic in the United States could grow by 21 percent ... rail traffic by 16 percent.

Thisis really a very simple and direct relationship ... but one that seems difficult for some to grasp.

Clearly, though, Ron Brown and Mickey Kantor understand that fundamental relationship, and today, I will talk about the opportunities we have in common -- the obligation we have -- to build a great transportation system.

So, my colleaguesand I came up with a blue print.

Think of the jobs that could produce. But it will happenonly if each country, my country included, putsthe tools in place to prepare for this growth in 10 years -- and does it now.

We said we need to improve planning and financing of infrastructure, bringing the private sectorin ... we identified regulations we would be better off without ... we prioritized technologies that would improve the efficiency and environmental friendliness of transportation systems . . . and we identified ways we may harmonize construction, safety, and operating regulations, so each country plays by the same rules.

Unfortunately, this week in California we were reminded of a common problem: the security of our transportationsystem.

We are democracies, and we cannot have one dangerousperson threaten millions of Americans traveling by air ... or a gang terrorize Tokyo's subway system . . . or pirates in South America hijack containers en route from port to mland destinations.

Most important, we identified areas where we could cooperate.

Every country is embracing change -- some faster than others. Much progress has been made in all

95

transportation modes maritime . .. and rail .

We agreed drivers of trucks and buses h comparable safety and operating knowledge have . and skills in order to be I1cense -- we cooperated . developing compatible driver standards -- and that is now working well.

aviation . . . trucking ...

Let me give you a quick report on that progress, starting with aviation.

If my friends Ron Brown and Mickey Kantor visit our border crossmgs and see trucks !med up for miles, they might read that as a good sign -- plenty of trade going on. But don't ever tell that to a truck driver stuck in the congestion, unable to meet a delivery deadline ... or to the manufacturer that has to shut down its assembly line because it's justin-time delivery hasn't arrived.

In February, Canadian Transportation Minister Doug Young and I signed an open market aviation agreement.

It is worth billions of dollars in economic development and has the potential to add thousands in new jobs to cities in both countries .

We' re already seeing a 40 percent increase in airline flights between the U.S. and Canada.

And in June, the United States and Brazil reached an agreement that increases cargo charters by almost 30 percent a year.

How do we speed the processing and cut congestion and bottlenecks?

Through joint planning and technology -- specifically, intelligent transportation systems.

We have liberal agreements with Mexico, Costa Rica, El Salvador, Guatemala, and Chile.

We' re seeing great growth in freight traffic with South America, up over 20 percent last year.

At the Nogales, Arizona and Otay Mesa, California border crossings we will have operational test programs, starting next year, to see if electronically we can check bills of lading, carrier credentials, safety records , and vehicle weight even prior to the shipments' arrival.

Recent events in the United States and throughout the world, however, remind us that we must constantly be focused on aviation safety and security. We must meet the standards of the ICAO and I hope even exceed those standards . My own Federal Aviation Administration stands ready to provide whatever technical assistance may be desired by any nation. Reliance on aviation is so enormous given the great distance in our hemisphere, that this commitment for safety and security must be our highest priority -period.

As an alternative to trucks crawling through congested border crossings, we ' re exploring the feasibility of moving goods by vessels that could safely navigate both ocean and inland waterways.

Only about 3 percent of goods transported between Mexico and the United States travel by water.

But if you can visualize on a map, there 's great potential for a Maritime System of the Americas, starting from the Gulf of Mexico and the Caribbean Sea ... up the Mississippi River and all of its navigable tributaries ... and to the north, the St. Lawrence and Great Lakes.

Now, in the area of trucking, I have two main concerns -- one is safety (you will hear about safety a lot today); the other is facilitating cross border movements.

We found when negotiating NAFTA, our countries had different safety standards. We could have set our mutual standard to the lowest common denominator, but we did not. Instead, we are striving for the highest possible safety standards, and that is the model I would like to use for the

My department's Maritime Administration has been holding meetings with shippers and cariers and port groups from all the NAFTA countnes.

We' re fmding interest, and we' 11 continue 10 explore this concept.

hemisphere.

96

Our ports and those throughout the Americas appreciate the importance of becoming more efficient. Additionalcapacity and new intermodal equipmentare needed, land side connectionsmust be improved, work rules need to be re-evaluated.

Throughoutthe region, we see our ports striving to rise to the occasion.

documentsfor the shipment are cleared before the

Finally, on rail, we are excited about the opportunitiesthat will come from the move toward privatization. For example, up to 49 percent foreign, private ownership in Mexico's railroad, the Ferrocarriles Nacionales de Mexico, will now be allowed.

This year, we've taken many steps. But the real test will be in 10 years ... to see if we have airports to handlethe 80 percent increase in traffic -- and do it efficientlywith a continued high-level of safely . . . to see if we can build a Maritime System of the Americas ... to see if we can get truckersacross borders without congestion ... and improve internationalrail connections.

cars reach the border.

Let me end on a personal note: There is no issue I have spent more time on as Transportation Secretary, than the relationshipbetween the United States and our trading partners.

I cantell you that U.S. rail carriers are expressing initial interest, because Mexico is one of their fastest-growingmarkets. Foreign investmentcould boostrail utilization,and encourage modernization of some existing routes, and new connections between our countries.

I lookforwardto our discussionstoday as a way to buildon the work I and eleven of my counterparts started last October in Tampa. I believe that the time is right to convene a meeting of all transport m1msters in the hemisphere to develop collaborative, strategic approaches to enhancing the efficiency,safety,and security of our transport systems. We have invitedour colleagues to Miami on August2 to join us in planningfor that meeting.

Through a cooperative initiative, I am confident that we can convert the many challenges and opportunitiesthat confront us into real progress.

Our carriers and the Ferrocarriles Nacionalesde Mexico have already undertaken many initiatives to improve connections; they've established privately financed rail terminals, so shippers can consolidate operations; and they've inaugurated despachoprevio, a systemsimilar to what we hope to do for our truckers, where all the necessary

Thank you.

97

Remarks by AmbassadorMichael Kantor United States Trade Representative July 1, 1995

you to this beautiful city.

a prosperous middle class and fostering stability with our neighbors.

American Presidents in the past have made an effort to bridge the vast distances between the United States and Latin America. A half of a century ago, Franklin Roosevelt, a great President who realized the need to engage our country in the world, and in this hemisphere, termed his desire for the Americas, a "Good Neighbor Policy. "

we took the first steps to build a new road to prosperity last December when the nations of the hemisphere met in a historic Summit of the Americas in Miami and pledged to create a Free Trade Area of the Americas by 2005. This week we are here to begin the hard work of fulfilling that vision .

A generation later, President Kennedy, who understood the same need for partnership with our neighbors, advocated an "Alliance for Progress."

It is a vision rooted in the dramatic changes in this hemisphere. Over the last 20 years , Latin America and the Caribbean has witnessed dramatic and historic economic and democratic revolutions.

New leaders are casting off the shackles of decades of heavy government intervention and trade protection . Along with the economic reforms in Latin America have come striking political changes. The only country in the hemisphere now with a leader who is not freely elected is Cuba.

It is a pleasure to speak to you today and welcome

Both of these efforts recognized the importance of expanding trade as a road towards common hemispheric prosperity . Yet, despite good intentions, these efforts rarely moved from rhetoric to action.

Now it is time for a partnership that is both a good neighbor policy and an alliance for progress. Now it is time for concrete actions to move beyond rhetoric, to a reality of partnership, mutual prosperity and growth.

The results have been stunning . The "lost decade" of the 1980s has been replaced by found opportunities in the 1990s . Inflation rates which reached several thousand percent in some countries have fallen to single digits in most nations. Latin America and the Caribbean is now the second fastest growing region in the world.

President Clinton understands the need to move beyond rhetoric to reality. That's why he has fought so hard to expand economic ties in this hemisphere and around the world.

Strengthening the economic ties among the nations of the Americas will cement recent economic reforms, foster growth, build the middle classes and strengthen democracy. This is not time to sit back and hope for the best.

He has dedicated his presidency to restoring opportunity for the American people. He understands the future prosperity of working families in this country is linked to those in the rest of the world.

The United States benefitted from these economic reforms in the hemisphere. U.S. exports to this region exploded from nearly $31 billion in 1985 to nearly $93 billion in 1994, creating over 600,000 new U.S. jobs. If trends continue, U.S. exports may reach $232 billion by 2010, greater than our combined exports to the E. u. and Japan. Latin

He is committed to social progress, not just in this country, but throughout the world because it is in our interest, too. Expanding trade with Latin America will foster growth in the region, building

98

to createJobs.fostergrowth and rai e srandards of living throughout the hemisphere.

Americ.an.5 spend 40 cents of every dollar spent on goods. These benefits spread throughout our economy. benefitting small businesses and large. from high-tech companies co farmers and everything in between. trade on U.S.

As bu ¡ine men. you all have ,•ital roles to pla_.

Trade agreemexn are mere pieces of paper if the do not ccompUsh the goal of facilitating and e.~ tradeam fo tering growth. That i why we ba, e combined chi meeting of the trade forum. We mu t hear ministers with a bus~ your conce~ and qu tions. We mu t move forward together. a partners.

Just ask the folks at Blue Mountain Arts. a small company with 100 employees in Boulder which makesgreetingcards. In business since 1971. they now export cards throughout Latin America and receive 25 percent of their revenue from internationalsales.

In addition, you can play an important role in educatingpeoplewhy this is in their intere t . There are many people who believe it is better to cut ourselves off from each other and they play on people' fears. We must w rk together to build an Ff AA that people will support.

Expanded economic tie in the Americas are benefitting all countries, though. ow we have a historic opportunity to take major steps toward further growth and hemispheric pro perity.

Yesterday, we began to take those steps. We had a very productive day. We began to turn the dreamand rhetoric of Miami into the reality of concrete agreements.

Some now question whether we can achieve the loftygoalsof the Miami Summit of the America .

I say we can and we must.

I say we have a historic opportunity to build a future for this hemisphere based on growing and pro pering together.

All of us recognized that we have a historic opportunity to promote growth and create jobs in this hemisphere. But with that opportunity comes responsibility. We pledged to work together to identify and then eliminate barriers to trade in this hemisphere And we must start now. Ten years is really not such a long time.

l say no one prospers if they hide behind walls of

fear.

We must devote ourselves to the task of fostering integration in the hemisphere and ensuring that it occurs in a rational way. That means a common set of trading rules for the whole hemisphere, basedon highstandards of openness,not a maze of agreements that complicate, instead of enhance, commercial relationships.

We face two clear choices for our future.

Fortunately. the example of hi tory is clear . One path is cutting ourselves off and building walls to divide us. History shows that path leads to ecoocrnicaIXi political calamity. The other path openingup, engagingin trade - lead ro prosperity and stability. This week we are la ing the growx!workto ensure that we continue to take that path. I look forward to working with all of ou.

We must be firm and committed. It is a long road and therewill be bumps and curves. But let us neverforget our destination. Our ultimate goal is

Thank you very much.

99

Luncheon Address

Hon. Thomas McClarty, Counselor to the President of the U.S. July 1, 1995

"The Miann¡ Process: The Spirit of Cooperation" Remarks by Thomas F. Mcclarty m Counselorto the President July 1, 1995 J'!ll extremely pleased to be here today, to see a large and enthusiastic gathering of friends of the hemisphere and the Summit of the Americas process. I especially want to thank Lt. Governors Schoettler and McKay for their kind words of introduction. Their presence along with Alec Watson here today emphasizes the Miami connection and tie-in to the Summit of the Americas. And thanks also to Governor Romer and Mayor Webb for so generously offering Colorado and Denver hospitality to us this weekend.

maintaining high external barriers, we do not lock out other's problems; rather, we lock up our own-your--talents and initiative. We cannot go on shackling economic dynamism which will be immediately released once the hemisphere is fully Our strategy is visionary yet integrated. achievable, bold yet practical, dramatic yet fully grounded in the experiences and prerogatives of individual nations. And with your help, we will succeed.

We strongly believe increased trade is a key component driving the entire hemispheric agenda, as outlined at the Summit: it provides economic growth, democratic consolidation, a breakdown of corrupting social patterns, and an attack on the illegal narcotics trade. It is an answer to many problems. But our agenda is much broader than simply trade.

Thisweekend is a forceful statement of support for implementation of the Summit of the Americas agenda. The large, impressive turnout is testament to the aspirations of our hemisphere for a better, more prosperous future. Today we are turning "dichos"into "hechos;" words into deeds.

As the Summit recognized, for the first time in history a new consensus of the Americas has formed.

Open markets work. Democratic governments are just. and together, they off er the best hope for lifting people's lives.

Atthe beginning of June I accompanied Secretary Christopher to the OAS General Assembly in Haiti,where I reviewed with hemispheric foreign ministers our collective efforts on Summit implementation. The session brought home how much progress we've made.

Commitment throughoutthe hemisphere remains strong. But we have only just begun the journey. Our current situationcalls for proper perspective; a clarity in our thinking. It calls for a steadiness of purpose anda resolve in our actions. Together, we must staythe course.

Since that-what some would call magical--moment in Miami, however, there have been difficulties in the hemisphere which have tested the strength and durability of the progress we have made. Some have cited these as proof our vision of a new hemisphere cannot withstand adversity. But to those who make this claim, I say very clearly: you are wrong.

President Clinton has compiled an impressive recordin ta1cing actions designed to usher in a new ageof open markets and prosperity hemisphereWide. Critical actions have included his strong supportfor NAFTA A, the GATT Uruguay Round, anctthe Summit of the Americas. The President ~ Pursueda building block process, one step at a time which has added up to a comprehensive strategy to beat down protectionist and other barriersto commercial and investment activity• By

Just a decade ago, Mexico's financial crisis would have been enough to send the hemisphere into a tailspin. But nations such as Argentina, Brazil, Chile, and others did not let the shock wavesfrom Mexico halt their own progress toward economic liberalization and open markets. In fact, our ability to deal with hemispheric difficulties since

103

the Summit has proven just how resilient economic and political reforms have been.

Nonetheless, the new hemispheric construct remains fragile. It is constantly under attack by those who seek to divide, those who seek private gain. If progress is to continue, it must be constantly nurtured. The key message of the Summit was not that hemispheric problems will cease to exist; rather, it was that we now have a mechanism to address those hemispheric problems which will inevitably arise.

hemispheric trade ministers met to 1 g roundwork to achieve the centerpiec lay the . f F e of te Summit: creauon o a ree Trade Area of the Americas by 2005. And the Forum today the tomorrow continues the process of and . . . th commercial integration, recogruzmg e crucial role private sector in development of FTAA2005the During the past several months it has . . . become fashionable to question hem1sphenc commitment the Summit agenda. Some have said we are not not committed to take the next steps . This weekend should dispel that myth.

At bottom, businessmen and women--you-understand this. Investment is flowing back into Latin America and the Caribbean, much of it brick and mortar which will remain even during future financial dislocations. For example, Wal-Mart has announced major investment in Brazil and Argentina. I know the Wal-Mart folks--they are hard nosed businessmen investing for profit, not charity. Conoco has just signed a $1. 7 billion joint venture to accelerate oil field development in Venezuela. GE, along with Japan's Mitsui, has just been awarded a $200 million contract to build a gas-fired power station in Chile. Previously planned investments by GM and others are moving ahead.

We' re working closely with Congress on trade matters. Broad fast track hearings have begun_ Chile accession talks began June 7 in Toronto.

Congressman Jim Kolbe, a strong and constructive proponent of Chile's accession, has said publiclyif we can work out the terms of 'fast track ' quickly, there could be an agreement with Chile shortly.

Chile's accession to NAFTAA is clearly the key test; if the process stalls our commitment to Summit goals will be questioned. We understand this isnot a time for partisan bickering or political advantage.

This is the time for leadership, commitment, and resolve. Increasing trade is a strategic issue in the post-Cold War world for each of our nations. By broadening and deepening trade and investment integration, we enhance economic prosperity and maintain global leadership. Without it, we turn our back on the promise of expanding markets. If we fail to seize opportunities with which we are now presented, we face the prospect of unilateral economic disarmament at precisely the moment when trade expansion has taken on strategic importance in the hemisphere.

And especially important in my view, even when investments have been put on hold, they have not been canceled. This is a marked departure from what would have been expected just a short time ago. It bespeaks long-term commitment, not the false comfort provided by speculative hit-and-run investment.

We must continue to nurture hemispheric relations.

We must maintain steadiness of purpose and resolve in our actions. Businesses are pursuing prudent investments, with realistic expectations.

And that's just about the right place to be in my view.

Finally, in actively pursuing Chilean accession, we ¡ here have not forgotten the rest of the hemisphere' particularly the Caribbean basin. We are very interested in Caribbean Basin initiative 1 enhancement--the President and Vice President ¡ at the summit have both spoken out in favor of this and pre-Summit meetings.

We. are_ working closely with Congress to refine leg1slanon ¡1es and would extend trade preferences in tectiles

FTAA 2005, Chile Accession As noted, this weekend represents a key Yesterday, component of Summitimplementation.

104

ohtersectors to counter trade and investment diversionwhich has arisen due to the NAFT A. fundamentally we seek trade and investment expansion,not trade and investment diversion.

hemisphere. For we understand it is the private sector which is the engine of hemispheric integration, and we need your active involvement and support. Working together, pursuing our common interests, we can move together confidently into the future . Our legacy to our children demands that we do .

Let me close by saying we' 11need your continued support to build a stronger. more prosperous

105

Towards a Hemispheric Capital Market William Rhodes, Vice Chairman, Citibank, USA H.E. Marie Michelle Rey, Minister of Finance and Economy, Haiti H.E. Domingo Cavallo, Minister of the Economy, Argentina Enrique Iglesias, President, Inter-American Development Bank July 1, 1995

"Towardsa HemisphericCapitalMarket" Remarks by WilliamRhodes Vice Chairmanof Citibank July 1, 1995 Thank you, Gentlemen.

Secretary

Brown,

Ladies

and

debt in 1982 represented 80% of investment flows to emerging markets . Today, it is probably less than 20%. In 1993, emerging market funds had over $50 billion in assets, compared to less than $1 billion in 1986.

It is a great pleasure to moderate this session on capital flows with such a distinguished and knowledgeable panel.

Increased trade integration is spawning greater cross border investing . NAFf A, Mercosur, the Andean Pact, Central American Common Market, the Association of Caribbean States, all encourage freer capital flows throughout the Western Hemisphere.

My own institution, Citibank , has an abiding interest in markets throughout the Western Hemisphere. We opened our first Latin American office in Argentina in 1914 and have pursued business interests in the region uninterrupted ever since.

Over the past 80 years, we've watched Latin America rise to become the investor's darling on several occasions, and then be abandoned when the going got rough.

Clearly, Latin America has made great strides.

But just as clearly, the region must compete aggressively for capital in the coming years with other emerging markets, and with opportunities in mature markets also.

Unfortunately, even bankers are not immune to the boom and bust approach. Bank lending to LA reached a crescendo pitch in the late 1970's and early 1980's. When loans intersected with doubledigit U.S. interest rates, the cross-border debt crisis ensued. Many banks and other foreign financial institutions pulled up stakes and left the region.

The recent Peso . crisis in Mexico not only underlined the vulnerability of short term capital flows from outside sources to such external phenomena, such as the increase in international interest rates and also to local political events, but also emphasized once again the need to develop a strong internal savings base and local capital markets .

Today, cross-border investment interest in Latin America once again is high, but several factors make prospects much different this time.

This panel will explore prospects for cross-border investment flows in our hemisphere, and examine hurdles to be overcome for capital markets integration to evolve.

Many, if not most Latin American countries have undergone significant economic reform with trade liberalization, privatizations, deregulation, tax reform, local capital market formation and expansionand the creation of independent Central Banks. Governments in these same countries are demonstrating strong political will, and good management in pursuing sound economic policy.

1. How Latin American countries can raise the necessary financing to satisfy the region's substantial infrastructure needs in the coming decade.

Investment flows are now mainly in the direct investment, equity bond area. Commercial bank

2.

The need for increased disclosure and transparency in local capital markets.

I would ask our panelists to comment on three things during their presentations .

109

Haitian Minister of Finance and Economy Michelle Rey has a long and illustrious career in private as well as public service. In her current position, her skills and abilities have been put to the test and she has come through with flying colors.

3. The necessary steps needed to increase local savings .

Our panelists are well qualified to examine these issues and provide their own outlook for the future of capital markets integration in this hemisphere.

They are:

Madam Rey is one of the chief architects of President Aristide ' s Economic Recovery Effort and has worked tirelessly with the multilateral organizations to advance Haiti 's economic recovery.

Domingo Cavallo, Minister of Economy for Argentina;

Marie Michelle Rey, Minister of Finance of Haiti;

Enrique Iglesias began his career as a banker, serving as Managing Director of Union de Bancos del Uruguay. He has also served as Minister of External Relations for Uruguay and Executive Secretary of the United Nations' Economic Commission for Latin America and the Caribbean.

As President of the Inter-American Development Bank, Enrique has increased its resources, steered a new course towards social improvement for borrowing countries, while helping them enter into an era of reform , liberalization and integration.

He has also carried out a program of modernization for the institution itself .

Enrique Iglesias, President of the InterDevelopment Bank; Domingo Cavallo, working with President Menem, has been the architect of Argentina's impressive economic modernization effort.

Argentina's economy today is one of the most open in Latin America and for that matter in the World. He served as president of the Central Bank of Argentina and has held numerous other government posts.

110

"Towarda HemisphericCapitalMarket" Remarks by H.E. Marie MichelleRey Minister of Finance and Economy, Haiti July 1, 1995 1.

BACKGROUNDTO THE I .AlINCHING OF THE EMERGENCY ECONOMIC RECOVERYPROGRAM

As of today, we have made substantial progress, particularly in the areas of macro economic stability, institutional strengthening and we are constantly looking for creative means of improving our absorptive capacity . In April, an IMF quarterly evaluation of the economic program certified that the government had exceeded its performance criteria.

Approximately US$400 million have been disbursed so far for balance of payment support, public investment projects and institution building.

On behalf of the government of Haiti I commend the US Department of Commerce and the City of Denver for hosting this important conference and this panel on private sector financing of infrastructure and privatization. Our workshop addresses a critical challenge for countries in the hemisphere, i.e. mobilizing private sector investment for infrastructure development. Haiti enthusiastically welcomes the opportunity to play a leadership role in this dialogue.

This program, which intends to create an environment conducive to sustainable economic growth and political stability, explicitly recognizes the key role that market forces will play in the allocation of resources.

Consequently our government seeks the participation of a strong and dynamic private sector both local and foreign in order to stimulate this economic growth in an open and competitive environment. To that effect, the President created a commission composed of private and public sector leaders in order to discuss initiatives that can promote investment, remove bottlenecks to economic activities and streamline our legal and regulatory environment.

Furthermore, in March 1995, President Clinton launched a "Business Development Council" which unites Haitian and American private sector leaders as well as high level government representatives of both countries. That month , the BDC held its first meeting in Port-Au -Prince which was inaugurated

by President Aristide at the National Palace. The follow-up meeting was held in Washington at the end of May and was hosted by the US Department of Commerce. Furthermore, in the same month of May, the government carried out a presidential initiative to organize a two-day economic symposium for Haitian investors living in Haiti and abroad, during which private and public sector representatives discussed ways of facilitating private sector participation in the nation re-building process.

Haiti is at a historic crossroad . Since the return of President Aristide to his country the 15th of October 1994 and the restoration of democracy, the government is faced with the formidable challenge of rebuilding a nation . As President Aristide often says, our primary goal is to raise our people from the depth of misery to the realm of poverty with dignity. We intend to accomplish this, by setting irreversibly our country on the path of sound democracy, sustainable development and open market economy .

2.

ELEMENTS OF THE EMERGENCY ECONOMICRECOVERYPROGRAM

In January 1995, after clearing its external debt arrears of $82 million and signing a letter of intent with the IMF, the government of Haiti presented its emergency economic recovery program to the internationaldonors. The program developed with the IMF, the World Bank, the IDB, major bilateral donors and key private sector representatives, was strongly supported by the International Community that committed a record $1.2 billion to this program. The donors continue to work closely with us to ensure effective and expeditious implementation.

111

1n January 1995 the government retained the services of the International Financial Corporation (IFC) in order to analyze and recommend strategies for the democratization of nine publicowned enterprises such as:

More generally, we know that in order to succeed in our goal of economic reconstruction, we must continue to make consistent and concerted progress in addressing our nations pressing social welfare needs.

That is why we are committed to democratization of public enterprises and are planning to allocate meaningful revenues from this program to address the basic needs of the poorest segments of the population.

•

4.

3.

• •

• • •

•

STATl JS OF THE PI ENTERPRISE DEMOCRATIZATION PROCESS

the electric company the telephone company the national ports and airports the cement plant the flour mill two commercial banks; and, an edible oil plant. In April 1995, it created the State Enterprise and Democratization Unit (SEDU), to implement and manage the privatization process; and last May, the IFC submitted its preliminary appraisal and recommeooations, on the nine state-owned enterprises for which it was contracted.

FTNANCTNGOPPORTTJNITIES FOR PRIVATE SECTOR

A Central Implementation Unit was established within the Prime Minister 's office. Funded with US$80 million with the World Bank and the International Development Bank, it provides the capability to implement critical infrastructure rehabilitationprojects that are labor intensive. The CIU is now contracting with domestic and foreign private sector companies to execute projects.

The government has established with the Overseas Private Investment Corporation a special $65 million working capital and loan facility to stimulate foreign investment and infrastructure.

These reports are being analyzed by the government. However , we are moving ahead in four of the nine categories. For the cement plant, the flour mill and the ports, pre-qualification documents are ready for mailing. The actual bid process will be initiated as soon as the financial audits of these companies are completed. The power company was the first of the state-owned enterprises to be restructured prior to privatization.

In this context, the day-to-day operational needs as well as the long term strategic issues are being addressed . A letter of intent was signed with Smith Cogeneration of Oklahoma and it provides for immediate construction of a 35 MW power barge. The passage of the privatization legislation will lead to the formation of a consortium between Smith Cogeneration, Electricite de France, HydroQuebec and the Republic of Haiti to address the future energy needs of Port-Au-Prince. As for the other companies scheduled for privatization, the transaction analyses are on-going.

The government is currentl y finalizing its negotiations with the U .S. on a Tax Information Exchange Agreement. This agr eement will enable Haitian business ventures to access private financing through tax incentive provisions of the U.S. Tax Code .

5.

CONCT.lJSION

We have taken significant steps towards meeting our country's newest and greatest challenge, but we still have a long way to go. With the continued support of the international community and the growing participation of the private sector, we can and we will succeed .

We welcome your investments and encourage you to participate in making our next historic milestone a reality. we can now confidently say : Haiti is back in business and is ready to go.

112

"Towarda HemisphericCapital Market" Summary of Remarks by H.E. Domingo Cavallo Minister of Economy, Republic of Argentina July 2, 1995 Minister Cavallo stressed the importance of integrating hemispheric financial markets . No economic integration is feasible if the financial markets are not integrated.

Therefore a key element to successfully reaching the targets established at the Miami Summit meetings in December 1994 is to pursue the development and liberalization of the hemispheric capital markets .

Minister Cavallo also expressed his support to the newly created Committee on Hemispheric Financial Issues, that was launched in Washington , D .C. during a meeting chaired by U.S. Under Secretary of the Treasury , L. Summers in late April .

This Committee provides a unique opportunity to deepen cooperation on financial matters in view of the recen t economic developments and the globalization of the world economy.

Integrated capital markets will facilitate trade and investment flows within the region and contribute to improve the availability of adequate financial flows for all countries along the continent .

Financial terms and conditions will improve with the liberalization of financial markets.

Furthermore, the development of domestic capital markets will be enhanced by the hemispheric integration of financial markets.

Comprehensive knowledge of capital market regulations throughout the continent is a crucial element for the integration of financial markets.

Coordina tion among banking and securities regulators becomes also a relevant aspect of integratedmarkets. The newly created Committee could contribute substantially to improve knowledge and cooperation in preparation for the hemispheric integration.

113

"Towarda Hemispheric Capital Market• Remarks by Enrique Iglesias President, Inter-AmericanDevelopmentBank July 1, 1995 1. Introduction

in our countries reverts to the private sector and the market. This is a weighty responsibility, of vast implications and historic importance, which we trust the Latin American private sector will know how to address effectively.

I would like to consider with you the subject of capital markets in Latin America and their connections with the international capital markets, in the more general setting of the structural economic reforms in which the great majority of the countries in the region have been engaged over the last ten years.

The second pillar, closely akin to the first, is the consolidation and strengthening of an efficient government by extensive reforms to redefine its basic functions in society and the economy, downsize the sphere of its responsibilities and its institutional dimensions, and introduce modern standards of organization and operation that will make it an efficient system. It will not necessarily be a smaller government, but one with functions different from those of regulator of the economy and entrepreneur in the production sphere, which new functions are ow being performed in a setting of transparency, accountability, and effectiveness.

One of them is to make an essential contribution to the promotion of equity and social development, competition, and the political consensus needed to strengthen the exercise of democracy and participation by the deprived sectors, which constitute the bulk of society.

In the broad view of the reforms undertaken in Latin America, it seems to me that the first thing to mention should be their systemic and truly revolutionary quality, in which they respond to a real convergence of economic and political factors in the region itself and to the international conditions in which our national economies operate. We would be hard put to identify another time in the region's economic history in which a body of reforms so vast has been launched in such a short time by so many of those countries. It has been what amounts to a virtual revolution by consensus.

2. The reforms in progress What are the basic elements of these reforms? In my view, they rest on four pillars, which differ from country to country in their specific nature and relative importance, but may be defined essentially as follows.

A third pillar of the reforms carried out in Latin America is financial and price stability, a critical requirement for the creation of a setting favorable to economic and social progress and to consolidation of the democratic system. The attainment of macroeconomic equilibria, particularly in the fiscal , monetary, and foreign trade spheres, poses one of the old habits of tolerance for acute inflation, high and persistent fiscal deficits, and yawning external trade and financial gaps .

The first pillar is a reevaluation of the role of the market and a new proof of confidence in the capacity for initiative and efficient economic management on the part of the private sector, which in the region, as elsewhere in the world, was overridden by government action in response to the conditions created by the Great Depression and the two world wars. Now it is government which takes, in principle, a subsidiary role, and the primary responsibility for resource allocation and the attainment of economic and social progressivity

The greatest difficulty in the way of attaining the targets of macroeconomic stability proposed in the region is that the sources of instability involve the action of domestic and foreign factors combined.

While the former part of the world economy, 114

which the Latin American countries have very little or no capacity to control or rectify . Indeed, with the globalization of markets and close interdependence among national economies , these factors have been exerting a growing influence on the economic performance of our countries, as the recent financial crises in the region so tellingly illustrate. Hence the challenge is not just internal, but also demands a major effort to solve the problems of vulnerability to external commercial and financial situations that have affected the region's development so unfavorably.

reduce unemployment and restore real wages, and the solution of the severe problem of the social debt.

The need to increase domestic savings should be recognized as a task of highest priority in the region's reform effort . Observation suggests that the sharp drop of mean savings in Latin America to their lowest level in the last thirty years has been caused by a deplorable lack of concern about this on the part of the economic authorities in recent years and by adverse effects of market performance. The ratio of domestic savings to regional gross product fell below 21 percent in 1994 , compared with the an average of about 26 percent in the seventies. It is disquieting that the sharpest drop has come in the last five years, when savings sank from 23 .6 percent of the regional product in 1989 to 20.7 percent in 1994, precisely when intensified reforms, especially those for the transformation and modernization of the structures of production and exports, required a mobilization of more resources for investment.

The fourth pillar sustaining the reforms undertaken by the Latin American countries is their increasing openness to trade with and finance from the outside world and their engagement in the world economy .

The vulnerability and instability of those countries in the face of external commercial and financial developments have been accompanies by a secular trend of decline in the share of the region's exports in world trade, from about 12 percent in the early fifties to about 3 .7 percent in 1994. This trend is an outcome of the inward looking development model adopted, for lack of viable alternatives , by those countries when they emerged from the Great Depression, and of the far-reaching transformation of world trade brought about by the technological revolution and the shift in the world geopolitical structure. Latin America's external debt crisis in the early eighties triggered the collapse of the traditional development model and became a powerful driving force of the new development policies, and especially of the reforms in trade and in the treatment of foreign investment.

The greater need for resources could be met thanks to an inflow of foreign capital that grew at an extraordinary rate, while the current propensity to consume in the region climbed to the highest levels since 1960. Unfortunately, however , a significant proportion of this new capital income was in shortterm portfolio investments, highly sensitive to changes in international interest spreads and to opportunities for short-term profit, and to contingent political and financial events.

The financial and exchange crisis of Mexico at the end of last year and its adverse effects on many other countries brought into the open the difficulties that could be created by a wide external financial gap financed largely by short-term resources.

The great lesson of these experiences is the need to promote a strong expansion of domestic savings as a requirement for meeting the region's rising investment needs and at the same time for mitigating the excessive financial vulnerability of some countries in the region.

4. Unfinished business Along with the first fruits of the reforms undertaken, there is more tangible evidence of several unfinished tasks that the region must urgently address with resolute political will. They include tasks relating to the formation of domestic savings, the expansion and diversification of exports, including those of products with higher value-added content, the establishment and consolidation of modern institutions, the generation of sources of productive employment that will

Another area accomplishments 115

in which Latin America have not measured up

resizing of institutions a highly complex task as well as a trial-and-error process of learning by doing, which affects both public and private institutions.

satisfactorily to expectations is the expansion and diversification of exports and markets. While the volume of exported goods and service did rise over the last five years almost twice as fast per year as the gross product, 6.2 percent as against 3.4 percent, respectively, the inadequacy of that growth can be seen by comparison with the increase in imports of goods and services, which rose an average of 13.5 percent a year during that period. Meanwhile, maintenance of economic stability in the region requires a major advance in modernization of the exporting structure and its international competitiveness in order to increase the proportion of manufactures and other products of greater added value. An important lesson of recent experience is that the transition from a protected economy - based on import substitution to an economy open to international competition involves some asymmetry in the dynamics of exports relative to imports, which results in a growing trade deficit. The growth of exporting capability and international competitiveness appears to take more time than was at first supposed.

This kind of macroeconomic disequilibrium, carried further than called for by the requirements of resources for economic growth, has proved in many cases a source of instability, and ultimately a brake on development.

It is obvious that a lack of good institutions can hinder the implementation of reforms or impair their results. For example, liberalizing financial markets can entail grave risks in the absence of appropriate institutional conditions in which the required supervisory and regulatory functions can be effectivelyperformed. Similarly, privatizations will not generate the greater efficiency they seek unless there are institutions capable of regulating monopolies and ensuring fair competition.

Solving the problem of rising unemployment in many Latin American countries is an area of unfinished work that is giving rise to increasing concern, and is recognized as a real Achilles' heel of regional development.

Though the macroeconomic situation has improved in many countries, with product growth rates in some cases beyond 6 percent a year, unemployment has risen significantly, doubling and tripling over the last five years. Even in the best situations, in which employment has risen, a climate of dissatisfaction has emerged owing to a loss of quality of the jobs on offer, their impermanence, and the decline of real wages. This is not just happening in Latin America, but is rather a condition that threatens to become internationally endemic and strikes severely at the industrialized countries and at the prospects for a fuller and wider free trade.

Another important unfinished task remains in the public and private institutionalsphere. A transition from one economic policy model to another, especially with the features and implications of the Latin American experience, entails change in and the adaptation of institutions that are decisively instrumental in the implementation of policy measures. Some of these institutions have had functions so narrowly specific that a shift in the direction of policy has rendered them obsolete or redundant. In other cases there is the option to reorganize the institutions and adapt them for the performance of new tasks. In addition to the transfer of enterprise and other activities to the private sector, another dimension of institutional transformation is the decentralization and regionalization of decision making and the administration of public and government functions.

All this makes the reorganization, change, and

Settling the social debt is an unfinished task on a large scale, and without any doubt the most momentous challenge facing the region at the end of the century.

The aggravation of social deprivation, the increase of critical poverty and. in general, the worsening of income distribution over the last decade in the wake of the external debt crisis and the recessive consequences of the adjustment policies have reversed the trends toward improvement of the sixties and seventies and accentuated the region's traditional social shortcomings. There are many reasons for the urgency and importance of undertaking resolute 116

efforts to improve distributional equity andsocial conditions in the region.

advisabiliyof developingfinancial systems further and making!hem more efficiett and stable in order to mobilize domestic and foreign savings for investmem. ~ reform of financialsystems has in

It is not only a matter of social ethics , in itself of fundamental importance, but of major economic and political considerations.

To increase mvestment, make changes in production and improve the overall productivity of the national economies, there must be human resources of the right kinds and in the necessary quantities , who, Their moreover, must be highly motivated. presence will also help improve democratic participation and consolidate political stability , which are in turn necessary for a climate favorable to investment.

The symptoms of econorruc recovery of the last four years make it possible to addressproperly the demand for resources for the war on extreme poverty and the launching of longhaul social development policies.

fact been undertaken in many Latin American countries, andimportantadvances have been made in the liberalization of financial markets and institutional modernization.

However, unsatisfactory formation of domestic savings, especially in the private sector, has offset the improvements scored in the fiscal sphere and the public sector as a whole. While government deficits have been appreciably reduced and some countries have acquired surpluses, to the consequent increase of savings, the overall domestic savings of many national economies in !he region have declined. The basic question at the present juncture is, then, to find the most effective ways to encourage and induce higher formation of private savings.

Economic efficiency is a necessary but not a sufficient condition for sustained development in the long nm, including improvement of the general living conditions of the broad mass of Latin Americans.In the present conditions in the region this will require specific government policies.

Experiencehas revealed the existence of structural factors and market flaws, and that in adjustment processes contradictions can arise which widen inequalities and aggravate poverty, making it necessaryfor governments to undertake deliberate efforts to improve distributional equity .

Experience also shows that, when there is the necessary political wiIJ, the imperatives of economic efficiency and budget restrictions can be reconciled with greater social equity and the war on poverty as Chile has demonstrated over the last five years.

The option of replacing domestic savings with a growing and massive participation of external finance has repeatedly proved a failure, especially when the composition and the terms and interest of the external capital induce consumption and, besides, undermine the stability of the local currency and the real exchange rate, as well as balance-of-payments equilibrium. The experience of the end of the seventies and beginning of the eighties, and that of recent months, agree in one way or another in illustrating lhe adverse effects on development of substituting external financing for domestic savings . The lesson learned is that the formation of domestic savings must be effectively encouraged.

How are domestic savings to be increased? There is no single or general answer to this question.

Some conventional theoretical formulations have proved irrelevant to economic conditions in Latin America, or their effects have been the opposite of !hose expeCled, for example, the assumption about the role assigned to an increase in nominal and real interes1rates. On the other hand, there appears to be grealer consensus about lhe effectiveness of some practical policy measures .

5. Financial reform and capital markets From these five unfinished tasks, I revert to the subjectof the fonnation of domescic savings and its more efficient channeling into investment. It is widely acknowledged that capital formation is vital and to the transformation, modernization, economic growth of countries. Similarly. there has been much emphasis in recent years on the 117

In regard to government and public-sector savings, policies for the containment of costs and the increase of fiscal revenues have produced the expected financial results, though not always in ways compatible with growth, economic efficiency, and the increase of employment.

help speed up the pace of economic growth and increase the rate of return on capital .

What domestic savings requirements or needs are demanded by sustainable rate of growth, which would be compatible with these countries' development potential and with a significant improvement in employment and living standards?

We believe that the region has the foundations in place upon which to attain a stable rate of growth on the order of six percent annually in the coming years, as was experienced in the late 1960s and 1970s.

In the area of private and semipublic savings, the establishment of institutionalized mechanisms for savings, whether voluntary or forced, has in the past proved highly effective. This has been true of, for example, savings and loan systems, which in varying forms have existed in Latin America for several decades. Another, more recent form of institutional saving is pension funds, which in the last fifteen years have been most successful in Chile, where their contribution to domestic savings has risen from 2.9 percent of GDP in 1989 to 3.6 percent in 1993 . More generally, it is postulated that the attainment of stable macroeconomic conditions and the cultivation of a climate of confidence in the permanence of democratic institutions and the rule of law are requirements for, as much as powerful incentives to, the formation of private savings. And this is the very point of the structural reforms on which the Latin American countries are embarked.

Nevertheless, a critical condition is to raise domestic savings to a level equivalent to 26 percem of GDP, similar to the average level prevailing from 1973 to 1977. This would assure proper availability of resources to rebuild and expand capital stocks gradually, and to correct the excesses of external financial vulnerability seen in recent years. The rate of GDP growth could be speeded up gradually from its current level, on the order of four percent a year until reaching the desired rate of six percent a year at the turn of the century.

Within this time frame, we would propose to increase the domestic savings rate at a steady pace of one percentage point of GDP per year, so that today's savings rate of 21 percen t of GDP would rise to 26 percent by 2000 .

Toe financial reforms being implemented in many Latin American countries are seeking to achieve greater integration, efficiency, and stability of financial systems by liberalizing markets, adapting financial institutions arx1instruments, strengthening the autonomy of central banks, and ensuring that economic authorities' supervisory and regulatory functions are carried out more effectively. As a result of these reforms, it is hoped that rates of return on financial investments can be normalized and that their variability and uncertainty can be reduced, so the time and space horizons for savings can be broadened, whilst permitting better allocation or channeling of savings to investment.

At the same time , increasing savings and allocating it better amongst real investment operations should

This greater savings effort must come from all levels of the economy and of society in the region, but chiefly from the middle - and high- income sectors, so that the commitments made to progress can be reconciled with the economic capacity of each sector, within the overall framework of progressive social equity. The great challenge facing the capital markets and financial systems in general is to foster and facilitate the strengthening of domestic savings in this way and to assure that the allocation of domestic savings among those opportunities open for expanding investment can be made according to the highest standards of efficiency.

118

The Evolution of Integration: Bringing Regional Agreements Together H.E. Alvaro Garcia, Minister of Economy, Chile H.E. Cesar Gaviria, Secretary General, Organization of American States H.E. Dorothy Wemeck, Minister of Industry, Commerce and Tourism, Brazil Carlos Sanchez, Secretary for Trade and Investment, Argentina July 2, 1995

"'TOWARDA FREE TRADE AGREEMENTOF THE AMERICAS" Remarks by H.E. Alvaro Garcia Minister of Economy, Chile July 2, 1995 There is a growing consensus about the advantages of reaching a Free Trade Agreement of the Americas that would stimulate the economic development of the member countries. Conditions are particularly favorable, given the economic recovery underway in the Americas and the liberalization of world trade resulting from the recentlyconcluded Uruguay Round of GAIT. The world economy is still weak and suffers from a clear lack of coordination. Thus, in my opinion, the decision to eliminate trade barriers and promote investment in the hemisphere appear to be the best way to benefit from world trade and to stimulate the growth of intra-regional trade.

to be concerned about free access to markets, while more developed countries are more concerned about such new topics as intellectual property rights, government purchases, environmental protection, etc. Thus, any future trade agreement will have to resolve these differences. Furthermore, it should include a joint commitment to economic cooperation and development to help enable the lesser developed countries to close the regional poverty gap.

The third is to promote what might be called coordinated unilateralism or convergent subregional integration. Thus, each country or group of countries could make its own proposals for creating regional free trade. Therefore, the existing work groups, and those to be established in March , 1996 with the cooperation of the OAS , IDB, and ECLAC should establish new , attainable goals beyond those already achieved by the WTO .

In 1997, when the goals have been agreed upon, each country or group of countries should make proposals how best to achieve the goals and the economic cooperation required , in the case of lesser developed countries. By the end of 1997, a negotiation schedule and deadline should be established. Thus, for example, if one third of the time bas passed, agreements covering one third of the goals should have been achieved . This will keep negotiations on schedule so that a final free trade agreement may be achieved by the deadline date. Furthermore, a system should be set up to monitor the progress of the negotiations, to sanction any irregularities, and to report periodically to the Council of Ministers.

The consensus is based on the following criteria.

The first is to join existing trade organizations at all levels. However, this effort only makes sense if regional and sub-regional agreements go beyond the World Trade Organization (WTO) in liberalizing trade.

The second is to set up technical work groups that during 1996 will study current conditions and establish attainable goals, based on the Miami Summmit accords, that will undoubtedly permit us to advance toward the economic integration of the Americas.

Now I would like to make four proposals to lead us as fast as possible in this direction: The first is to accept the WTO accords as the basis for regional integration and to concentrate further discussion on those topics not resolved by the WTO that would contribute to the further liberalization of trade . These include such problems as subsidies and different criteria for determining national content or origin.

The fourth is to encourage citizen participation in the economic integration process. This means an education program to inform citizens about free trade and its advantages and series of national meetings to enable the public to express their opinions and concerns . Such topics as social equality and sustainable growth should be discussed

The second is to recognize the differing economic Conditionsand attitudes toward free trade that exist inthe region. The lesser developed countries tend 121

these commercial opportunities, and develop communication and education programs on the advantages of free trade . Lastly, the integration process would be strengthened by the increased interaction between businessmen and workers in supporting government negotiations. With input from different sectors, governments can achieve the necessary social consensus to negotiate successfully.

in order to reach a consensus. The same is true for economic aid, which lesser developed countries will require so that they can reap the economic benefits of integration and free trade and not fall further behind .

To gain supporters for this proposal the Council of Ministers of the Trade Agreement could identify and disseminate the economic opportunities resulting from integration (i.e., new businesses), establish communication channels between businessmen so that they may take advantage of

122

"The Evolution of Integration: Bringing Regional Agreements Together" Remarks by H.E. Cesar Gaviria Secretary General, Organization of American States July 2, 1995 This is a historic occasion for the Hemisphere.

The Ministers of Trade of the Americas chartered in Denver a path that should guide us in our efforts to build a continent united by trade, investment and growth.

Second, after unilaterally liberalizing their economies, several countries witnessed the rapid expansion of bilateral trade with their neighbors .

Open markets uncovered latent complementarities and synergies between the economies of several sub-regions of Latin America. The combination of these two processes -- limitations of old integrationistmodels on the one hand and increased profitability of liberalized integration on the other -- convinced the countries of the desirability of a "new type" of integration.

With this Summit the political commitment to have a Free Trade Area of the Americas by the Year 2005 has been translated into concrete actions.

Now we have a detailed methodology that guarantees that our common goal can be achieved.

The initial work program, approved by the Ministers, is certainly an orderly and technically sound approach to address the key areas of the negotiations. And I am sure that by next spring we will be able to fulfill the mandates assigned by the Ministers to the working groups and to the tripartite committee of OAS, IDB and ECLAC.

Governments reacted positively trying through free-trade agreements to organize and encourage this revitalization of neighboring markets. And the result was an explosion of new or revamped integration and fre.e-trade arrangements such as MERCOSUR, the Andean Pact, G-3, many bilateral understandings, and even NAFf A .

With the purpose of inviting the debate, let me now present some views on the evolution of integration in the Americas and on how we could work to bring all the agreements together.

What today seems almost obvious was far from clear at the time. It was a difficult decision to abandon old integrationist models and embark on the coordinated liberalization of bilateral and regional markets.

Political will, conviction, confidence-building, and a great deal of technical work were needed. And in the process a "new type" of integration emerged. This type of open integration leads partners towards free trade without increasing protection vis-a-vis third parties.

Many countries in the Hemisphere, in their search for a new development model that would allow them to correct the distortions caused by protectionism, individually launched processes of trade liberalization.

As this policy spread through the region, two phenomena emerged. In the first place, unilateral liberalization began to clash with the straightjacket of past trade agreements and commitments. "Oldstyle" integration, designed within the confines of the import-substitution model, created an inescapable tangle of legal obligations and significant limitations to the opening of the economy. Thus, countries were confronted with the dilemma to have to choose between remaining faithful to old promises or pushing forward with their liberalization strategies.

In the Americas we have a web of over 26 finalized agreements and several new ones are currently being discussed. At the same time almost every Latin American country is bound by the global commitments achieved at the Uruguay Round. Having consolidated regional integration, we can now realistically think of creating a Hemispheric-wide free trade area .

123

(

This work reveals that areas of convergence and divergence were created by the spectrum of agreements. The central finding of this effort is that when taken as a whole, these agreements reflect an overriding compatibility, despite their differences in parameters, formulas and regulations.

But today we still face conflicting forces. The most obvious difficulty is to move towards greater trade liberalization through a complex web of agreements that have different parameters, regulations, disciplines and standards. Achieving free-trade in the Hemisphere through the exercise of ever-expanding the number of bilateral, regional, or partial agreements seems as an inefficient and probably fruitless method.

To further harmonize these multilateral commitments, the time may have come to consider registering the regional agreements with the WTO -- those that are not yet registered -- while taking into account the understandings reached under the Uruguay Round.

In the midst of this dilemma, a light appeared to guide us politically through this difficult task. I am referring to the Miami Summit, where the leaders of the democracies of the Americas made the decision to create a Free Trade Area of the Americas, for which negotiations are to be concluded in 2005.

This decision could create an atmosphere of increased transparency and have the healthy effect of promoting a more rapid concordance between subregional and multilateral policies, thereby making it easier for the Hemisphere to progress with a common general reference point in the multilateral regulations.

That is why we are here -- to make an inevitable political mandate a reality. The Presidents and Heads of Government wisely understood that their role was to impress upon the process the necessary political will, to set up the plans of action, and to assign responsibilities. They have already done so.

The process of creating the Free Trade Area of the Americas would be comprised of two important phases . The first would involve fostering mutual trust, sharin,.g information, establishing the technical needs of the process, and defining the parameters that would guide the joint effort. The second would be the negotiation phase, in which the actual agreements would be drafted.

The Advisory Group of the Special Committee on Trade, under the guidance of the Vice Minister for Industry of Peru , and the Trade Unit recently created in the General Secretariat of the Organization of American States are already collaborating closely. Moreover, the close interinstitutional cooperation that has been formalized between the IDB, ECLAC, and the OAS on the topic of trade ensures the technical soundness and the full use of each institution's capabilities.

We would like to facilitate this process by reiterating some of the ideas contained in the Report of the OAS Committee on the foundations for the construction of the Free Trade Area of the Americas.

A first contribution from this collective effort is the Analytical Compendium of Trade Agreements in the Hemisphere, prepared under the Unit's coordination, on the initiative of the Committee, and that has been presented to the Ministers of Trade, following the historic mandate of the Summit of the Americas. This is the first time the free trade and integration agreements in force in the Americas have been organized, described, and systematically compared using a common methodology.

In the first place, the Free Trade Area of the Americas could be built on two basic pillars: the multilateral regulations of the GATT /WTO system and the commitments contained in many of the regional or bilateral agreements already in force.

By using the GATT regu lations as the first harmonization tool, it will be possible to avoid building a parallel system of commitments that could be redundant in many areas. Energies could thus be focused on the negotiation of more

124

contentious topics in the areas that transcend the current scope of GA TT regulations and those that are not covered by the WTO umbrella but that are unavoidable in the context of the Hemisphere.

It is essential to recognize that the problem involves support for the transformation of these countries so that they can truly benefit on a longterm basis from the liberalization process. It will be necessary, for example, to channel significant investments to develop latent comparative advantages that exist in many of these countries, but that could not be exploited on the basis of a simple guarantee of market access.

We must take advantage of the experience of

agreementssuch as MERCOSUR and NAFTAA, which will serve as significant components of the eventual Hemispheric-wide free trade system.

These agreements have already developed and consolidated regulations in critical areas of negotiationand could eventually serve as reference for harmonization and convergence. It would be inefficientto try to make progress by forcing those who are ahead to backtrack.

II

Ministers, entrepreneurs and delegates: But beyond all this technical discussion, we have to understand that in our world today, trade negotiationsare no longer the realm of specialists.

Today, trade issues are at the heart of domestic politics and foreign policy in every country without exception.

This means that we have to acknowledge the political nature of the process towards a Hemispheric wide free trade area.

Perhaps the same Spirit of Miami that drives many areas of the Hemisphere's political agenda could also inspire us to expand the liberalization process. When we think about new agreements and further steps, we should always bear in mind that our final destination is integration of the Americas.

II

Therefore, we have to manage with infinite sensibility and care the expectations, the rhythms and the priorities of all the parties involved. The certainty that we have a joint commitment and a set of common goals will help us significantly to patiently construct a vigorous consensus in all this delicate matters. What happened here in Denver has proved that we can agree on critical issues and move forward. We have to continue with the same attitude -- not rushing, but without pause.

I would also like to refer to the issue of the specific needs of smaller economies.

This group of countries requires an approach to integration that explicitlytakes into account the risks they will face in the context of Hemispheric-wide reciprocal trade liberalization.

Thank You.

125

"The Evolution of Integration: Bringing Regional Agreements Together" Remarks by H.E. Dorothea Wemeck July 2, 1995

goal of negotiating a Hemispheric Free Trade Area. The strengthening of MERCOSUL, the Andean Group, the Central American Common Market (CACM) and the Caribbean Common Market (CARlCOM) will assist in the simultaneous negotiations with our industrialized trading partners. The goals we have in mind are as follows:

MERCOSUL is becoming an important economic and trade area. MERCOSUL, with an annual GDP of over $750 billion, constitutes over 80% of the total GDP of Latin America andthe Caribbean , excluding Mexico. The MERCOSUL Member Countries have displayed economic dynamism and exhibited growth rates above the regional average.

The liberalization process in trade, business and finance, as well as the measures taken to privatize and streamline the size of the public sector, are factors that have attracted a growing interest from business executives in the industrialized countries.

To continually strengthen and deepen MERCOSUL and other subregional arrangements, overcoming any difficulties inherent in the integration process; and

We must deepen MERCOSUL not only in its trade, economic, and financial aspects, but also in its political, cultural, and social aspects. Only such growth and development will ensure a mature negotiation toward the planned Hemispheric Free Trade Area, evolving through the South American Free Trade Area (ALCSA). Which is the path to follow? How should we design the relationships among and between groups and countries? These are questions we need to address at our upcoming meetings of Regional Trade Ministers .

To enhance the current customs union which, as everyone knows, must move beyond its current stage of "exceptions and adjustments, " seeking to achieve a more transparent common market as quickly as possible.

As the relationships among and between the MERCOSUL Member countries deepen , so do their trade partnerships, both with the countries of the Americas and with the rest of the world . As we say in Brazil : We have given priority to a liberalization policy that is unprecedented in the history of Southern Cone . We are well aware of Brazil's significant responsibility during this process.

There is no doubt that "regionalism" is here to stay, despite the difficulties and crises that arise-and will continue to arise--from time to time, in one country or another. This regionalism is not protectionist, nor inward-looking, but rather is a regionalism that, without any doubt, has supported the multilateralism we all advocate so strongly.

There is no opposition to open regionalism. This topic has already been discussed at length, but nevertheless it is important to emphasize that we advocate a deepening of sub-regional integration arrangements, so that we will achieve a broader free trade area, whether it be hemispheric , or with the European Union, or with an Asian group.

It should be emphasized that both intraMERCOSUL and extra-MERCOSUL trade volumes have reached significant levels, demonstrating an outstanding potential for growth and diversification . For instance, the intraMERCOSUL trade volume jumped from $3.9 billion in 1985 to $8.2 billion in 1990, and to $16.7 billion in 1993. We most likely will finish 1995 with a trade volume of about $24 billion. But the overall external trade of the MERCOSUL countries has exhibited even more meaningful results, having gone from $48 billion in 1985 to $75 billion in 1990, and surpassing the benchmark

Just as regionalism is not opposed to multilateralism, the desire to deepen regional arrangements does not imply any opposition to the 126

of $100 billion by 1993. For this year, 199.S, we envisage somewh ere aro und $125 billion in the export and import of goods. When the service sector is included , the tota l value of the Southern Cone countries' externa l trad e flow will be at least $160-180 billion .

I am aware that this process is irreversible .

However, we still have a long way to go in solidifying and consolidating these initiatives, as well as in implementing programs to reduce the existing asymmetrie s and in coordinating our macroeconomic actions, primarily within the scope of MERCOSUL . The governments of our region are working hard in this direction , now more than ever in harmony with the views of business executives and other sectors of society, seeking to deepen the sub-regional integration reflected in MERCOSUL . Once this integration is fully consolidated, drawing closer to other trade blocs and creating additional free trade areas will be increasingly feasible, free from the obstacles and frustrations that we are overcoming, little by little , with a great deal of political will and determination .

Notwithstanding the significant increase in intraMERCOSUL trade , which went from 11% in 1990 to about 20% in 1994, the NAFTA A countries are the MERCOSUL sub-region 's largest trade partners in the Ameri cas , w ith about 22 % of MERCOSUL 's total trade flow . It is appropriate at this time to draw your attention to the following point: despite the importance of the North American countries , the largest share of MERCOSUL 's trade is carried out with the European Union. There ar e not any "captive" markets , since the MERCOS UL countr ies are characteristically global trade rs . " II

The results attained by Brazil under the Real Plan are important not only for Brazil but, indeed, for all of the Americas. We are aware that these results of the Real Plan are essential in order to make MERCOSUL stable and viable, guiding us toward a broader Hemispheric Free Trade Area.

Stabilization with sustained growth within Brazil would consolidate MERCOSUL, making it possible to draw closer -- efficiently and competitively -- to both the remaining countries of the Americas and those of the European Union.

Today politicians, business executive s and workers have in mind what a few years ago we called the MERCOSUL Dimens ion .

Policy making, government decisions and business planning strategies all inevitably must take into considerat ion a broader perspective, beyond that of ju st one 's own country. And that is what is now being done within MERCOSUL. It is an unpre cedented practice, one that is difficult to learn, but it will be a characteristic of policy-making and business decision-makingover the next few years. We have no doubt that very soon the "MERCOS UL Dimension will spread to all the other sectors of society, beginning with organized groups and later reaching individual citizens who -- perhap s without noticing - today are reached by products, services and hab its unimaginable a few years ago . I can confidemly state that very soon we will be dealing with a "Hemispheric Dimension " in making our economic, financial and policy decisions .

11

11

Today we are heading toward a stable situation that I am certain will soon guarantee for our region the four essential fundamentals for an efficient integra tion, as postulated in the example of the European Union 's Maastricht Treaty. These are price stability, convergence of long term interest rates, budget discipline and exchange rate stability.

Stability is the goal that is implicit in the policies of the Member Countries of the Asuncio n Treaty, whose political will was confirm ed in the Ouro Pret o Prot ocol of December 1994 .

II

127

Toward a Free Trade Area of the Americas Stephen Chesebro', President and CEO, Tenneco Gas, USA Manuel Feliu, President, CEAL, Chile Juan Gallardo, Coordinator, COECE, Mexico Kevin McGrath, President and CEO, Hughes Communication, USA July 2, 1995

"Toward a Free Trade Area of the Americas" Remarks by Stephen Chesebro' President and CEO, Tenneco Gas July 2, 1995 On behalf of the business sector, I want to add my congratulations and thanks, first to the great state of Colorado and the city of Denver, for serving as host to the Hemispheric Trade and Commerce Forum.

We're moving forward with our workshop recommendations. We'll meet again at the followup forums, such as the Energy Forum in October in Washington. We'll build success one project at a time -- and they will serve as building blocks to achieve greater success.

I also want to add my thanks and congratulations to the Latin American and Caribbean participants for their active participation, and to the North American government and business leaders who are here.

The findings in the workshops were nearly unanimous, as you've heard, that the free market creates economic growth, job opportunities and wealth. It integrates business between nations and states. It integrates different industries, and even nations within hemispheres. We are all truly in this together.

The most important thanks -- for their initiative and leadership -- go to the departments of Commerce, State, Energy and Transportation, and specifically to Commerce Secretary Ron Brown, for putting this forum together. Obviously he had a great supporting cast that includes Bill White from Energy, Federico PeĂąa from Transportation, Trade Representative Mickey Kantor, and from the White House, Mac McClarty .

There is much more work to do, and it requires the type of relentless effort that we've seen so far .

As nations, we need to quickly develop -- with the emphasis on quickly -- sound, predictable fiscal policies, consistent laws and regulations, multiplepath development for infrastructure projects, and closer ties between nations.

The business community is prospering worldwide because of their tireless efforts. Global and hemispheric integration is taking place even as we sit here.

And throughout all this, we must maintain the unique social and environmental values and integrity of each of our nations.

Remember the Miami meeting last December -the Summit of the Americas. The unqualified success there has been followed by the unqualified success we've enjoyed here. These truly are historic events. Each of us will look back someday and say, "I was there, I was part of it," and enjoy the remembrance.

We at Tenneco are pleased to have the opportunity to participate in Latin America . As you know we' re involved in two large natural gas infrastructure development projects -- pipelines from Argentina to Chile and from Bolivia to Brazil. Both will establish markets in new areas and alleviate significant environmental problems.

Both will also lead to substantial follow-on development activities.

There's more to come. Dates have been set.

Work is assigned. Agreements have been reached and relationships cemented, and economic progress is spreading throughout the hemisphere. Speaking of economic progress, what has really been decided and achieved here?

Tenneco has a long history of activity in Latin America, and we have always been warmly received there. We are pleased to have a lot of friends and partners located there.

131

I'm luck to to have the opportunity to serve as president of a pipeline company at this historic point in time . Our hemisphere is experiencing unprecedented economic growth. Borders are falling, and the spirit of cooperation is growing.

We want to expand our presence, not only in energy and natural gas pipelines, but also in automotive components, forest products, farm and construc tion equipment and shipbuilding.

So reme mber, economic development is about

people - improving their quality of life, providing

I attribute a lot of this to Secretary Ron Brown and his enthusiastic, capable staff, and to all of you here today at this historic forum .

jobs , and providing economic security.

Thank you.

132

"Toward A Free Trade and Commerce Forum" Remarks by Manuel Feliu Chairman of the Board Consejo Empresario de America' Latina July 2, 1995 Ladies and Gentlemen:

This time we will say "yes" to free trade , but looking toward the market , not away from it.

I am honored to bring to this meeting the enthusiastic support and faith in free trade of the BusinessCouncil of Latin America , CEAL. I am proud to lead an organization of businessmen and womenwho perceive private initiative, the market economy and the free exchange of goods and servicesto be their foremost banners and pursuits.

I am pleased to come from a region and a nation where these principles and priorities continue to make headway in opportunities , recognition, disciples and legitimacy.

We will say "yes " to free trade, but to expand competition rather than to hamper it.

We will say "yes" to free trade, but not to close ourselves off from the rest of the world, but rather to integrate our activities even more deeply into the world economy.

We will say "yes" to free trade , but on the basis of a common development model which stresses free initiative and freedom of labor , which moves productive responsibilities out of the public sector , and which strengthens public investment in human capital, particularly in the areas of education , housing and health care, with a clear preference for the most impoverished.

We have been waging this battle for a long time and we feel that our ideas are shared by this forum. We believe that our hemisphere today is facingan historic opportunity. The commitment of the Miami Summit to form a free trade zone before the year 2005 does more than pose a challenge for governments; it summons to the private sector. The test is all the greater for the private sector, not only as the catalyst for economic development, but also as the foundation uponwhich the structure of trade integration in the Americas will be erected.

We will say "yes " to free trade, with the understanding that this is an endeavor which calls for the participation, not just of our foreign ministries , but also the private sectors of each nation.

In these tasks , we are working against time. The year 2005 is in fact not tomorrow; it is today. If this project does not begin to take shape now, it runs the risk of becoming another common rhetorical fixture and just one more deception .

The governments and leaders of the Americas are responsiblefor guiding the free trade project along the path history is moving and away from new frustrations. Latin America, particularly, is aware of several experiences of integration and commercial agreements which, sponsored by market intervention oriented governments, were implemented against the market laws and against economic freedom. The region has learned hard lessons from these experiences and, although it may seem almost unnecessary to raise the topic here, it would be most distressing if we were to repeat our past mistakes.

The task we have before us is formidable, but we will have much better grasp of it following this forum. In effect, it is difficult to conceive of a free trade zone between economies at different stages of development. It is difficult to begin to look at business activities from a hemispheric perspective where a local horizon used to suffice.

It is difficult to establish conditions of equal compet1t1on where economies show profound disequilibria and tremendous differences.

133

We need to be clear on this from the beginning: the worst thing we could do would be to initiate this effort at trade liberalization by trying to introduce greater rigidity into the existing labor markets. As a Chilean, I believe I have the stature to contend that such a path leads to nowhere. In Chile, the modernization of the labor market was key to the nation's rapid, successful recovery in the wake of the international recession and crisis of 1982-84. Since then, real wages have improved steadily, based on productivity increases.

Undoubtedly, all of this is difficult, but certainly not impossible.

At CEAL, we believe that the challenge of a free trade zone is not consumed by the Herculean task of standardizing regulations and legislation aimed at enabling the business community to work between the same floor and the same ceiling in Detroit, Sao Paulo, Guayaquil, Tegucigalpa or Concepci6n. The negotiations will necessarily have to confront -- hopefully sooner than later -the uneven levels from which we are starting. In general, liberalizing efforts should focus additional energy on modernization, privatization, reducing bureaucracy, curbing public spending, fighting corruption and expanding opportunities for the private sector.

Another complex topic is the environment where considerable differences can also be found. The free market model demonstrates that there is no reason for development and environmental protection to be incompatible , at least when the incentives for respecting and safeguarding the integrity of nature are well devised .

The economies which have yet to do so, should naturally move toward the creation of these incentives . But it is clearly unfair to impose overnight regulatory standards on the less developed nations, when it has taken the industrialized countries years to implement such reforms, and only after causing serious environmental harm.

As compared to the North American economies, those of Central and South America present areas were left very much behind; it will be important to acknowledge those areas when the time comes to negotiate. Without such recognition, we will never secure the framework of equity that is key to the formation of a free trade zone; without such a framework, achieving this goal is more than difficult; it is impossible.

As such, there are several critical issues on the agenda we have before us. I would like to note just three:

The Latin American business community is not seeking, by any means , to evade its environmental responsibilities. But we should not be asked for miracles, nor for more than our own societies are in a position to offer at this stage in their development.

We believe that the topic of labor is going to lead to much confusion. Broad segments of public opinion continue to believe that the reason real wages in the southern economies are relatively low, in comparison to those of the United States, lies in the lack of so-called "social conquests" or entitlements achieved by our workers. Quite frankly, this perception is mistaken. If salaries are lower in Latin America than in the developed economies, it is not due to a lack of social sensitivity -- as we are often led to believe -- but rather because productivity in our region is far below that of the developed world. Furthermore, for many decades, the socialist-oriented development strategies used in our nations were responsible for keeping that productivity low.

Our position on infrastructure is equally delicate.

In addition to the costs inherent to implementing a project or making an investment, in Latin America the business community must also bear the costs resulting from deficiencies in ports , roads and services which characterize our economies.

Worse still, our international roadways are far from meeting the needs of trade in light of increased productivity. For example, no highway system connects with the Mexican network . Thus, for Mexico -- in practice -- overland trade penetration ends in Guatemala.

134

fhe weaknesses ofour_infrastructure are critical.

This is exemphfied in a recent study which orted that over 1.4 billion dollars worth of reP . l h competitivenessts losteac year by Chile's export communitydue to msuffic1ent infrastructure; that C . I total exports. In is some 12% o f th e nations I ' • • otherLatinAmerican nations, the situation is even more dramatic. The issue is a serious one, since it affects the competitiveness of our societies and puts our companies at a frank disadvantage vis-avis the developed world.

Nonetheless, even while these and other topics may be sensitive, the truth is that these problems will pale in comparison with the historic opportunity that free trade in the region offers to us all: to the small nations and the larger ones, to the state-ofthe-art companies and those which have yet to modernize, to the advanced, globalized economies and those that are just beginning to appear on the international stage.

If we do things well, with a view toward the future, with generosity, looking toward the market and listening to the private sector, we will all have much to gain. The hemisphere, I believe, must continue quickly toward an encounter with its new opportunities. This is not the first time that the Americas have been called to face a common, higher destiny. But events seem to indicate that this call is the final one and that -- therefore -- we have no time to loose.

At CEAL, these difficulties do not hamper our efforts or instill fear. We are committed to open marketsand to modernization. We believe that, in the context of thoughtful negotiations, the differencesthat exist and the problems we confront needto be acknowledged and tackled with realism and a sense of equal standing for all.

Thank you.

135

"Toward a Free Trade Area of the Americas" Remarks by Juan Gallardo Coordinadora de Organizaciones Empresariales de Comercio Exterior, Mexico July 2,1995 Many of them are already being applied.

On behalf of the Mexican private sector, I would like to thank our hosts for organizing an enormously exciting forum. We consider it a privilege to have shared these days with such an extraordinary gathering from all over the

Third.- The goal now effectively established is nothing short of real integration in a single undertaking . This clearly means two things:

Hemisphere.

A comprehensive agreement from dispute settlement to environment that includes all issues.

Together, in this "mile high" city, all our countries have taken a major step forward.

A commitment in all countries to real changes from eliminating the misuse of trade remedy laws to fostering a hemispheric competition policy.

From Simon Bolivar's first call 150 years ago through to John Kennedy's Alliance for Progress in the 60' s, many initiatives, have been put forth for hemispheric integration. Never have the following four key elements been present as they are loud and clear in the Joint Denver Declaration of Ministers.

Last. - Today we have the trigger for success - a calendarized, structured, work program with all parties on board . This work program is only as good as we make it.

First.- We are all now convinced that trade is the proven wealth multiplier and we all see its enhancement as a key way to raise the standard of living in our respective countries. For this reason, the question of authorship is not under debate and belongs to all simultaneously. The first three words: "We the Ministers ... " say it all.

The spirit of this forum clearly recognizes the value of real involvement of the private sector.

There are four reasons for this: First.- No one better than the players on the field can structure and commit specific achievable targets.

Second.- Of course there are valuable existing structures and agreements.

Of course progressive building.

Second.- Creative solutions are an essential part of this process. The linkage and synergy between all our private sectors, as seen here today, contribute to imaginative problem solving .

there is a need for reciprocity, transitions and constructive bridge

Third.Free trade agreements are massive detonators of change and modernization . In that context, our private sectors must clear the path by building the necessary consensus within our spheres of influence .

Of course there are sensitivities. Yet, this time the problems are all ours on the table shared with frankness and friendliness .

The enormous wealth of talent in this room constitutes a unique brain trust that should be used as an essential building block .

Finally. - The challenge of implementation :"making it happen after the deal is done" -- is daunting and fundamentally the responsibility of the private sector.

We all know there are solutions.

136

Private sector involvement must be a real partnership with workers and scholars in full synch withour negotiators, with a disciplined, systematic approach that addresses the broader requirements for competitiveness. We, in Mexico, as I am sure each of you in your countries, are very proud and committed to this partnership.

There is a very appropriate saying in my country for this occasion: "The worst enemy of something good, something perfect. "

is

All the elements are here today to make it happen.

We can -- and we will.

137

"Toward a Free Trade Area of the Americas" Remarks by Kevin N. McGrath President and CEO, Hughes Communications, USA July 2, 1995

Good Afternoon.

felt there was greater potential for such a business.

This conference reinforces that view.

It is indeed an honor to be addressing today's final session.

Now, as proud as I am of this venture, I am not going to use my speech as an advertisement for the project. We will have competitors--good and strong competitors--in the direct-broadcastbusiness: Panamsat, Globsat, Nahuelsat, Intelsat, and, possibly even, Rupert Murdoch. Rather, I will use this as an example of how one can fashion a successful business in a manner which I believe is necessary to shaping the free trade area of the Americas.

Let me add my voice of praise to that already spoken for the outstanding work of Secretary Brown , Governor Romer, Lt. Governor Schoettler, Representative Schroeder, UnderSecretary Rothkopf and your entire team.

I would like to echo the thoughts of Senor Gallardo . This conference begins to fulfill the dreams of our great hemispheric leaders: Artigas, Bolivar, O'Higgans, Morelos, San Martin and Washington. Frankly, I will tell you that I have been awed by the breadth of discussion over the last several days .

It involves three critical elements: 1) Building a business with strong partners from within the region.

These partners must be entrepreneurs first, and then, strong politicaJly. We have these. In Mexico, our parmer is the Vargas family which owns Multivision-the largest pay-TV company in Mexico . In Brazil, our partner is Roberto Civita of the Abril Media Group, the largest publisher in Brazil. And, in Venezuela and elsewhere, our partners are Gustavo and Ricardo Cisneros--the owners of Venevision and other media properties.

Moreover, we will have local partners in every country in the Caribbean and South America. We don't do this because of charity--we do it as a result of enlightened self-interest. These partners understand their markets and work better with their Governments than we ever will.

My remarks will be brief.

The company I run--Hughes Communications--is reasonably well-sized -- about $400 million in annual revenue. Its principal business has been satellite ownership and operation. It is part of Hughes Electronics, which has about $15 billion in annual revenue--wbich is part of General Motors, which has $150 billion in yearly revenue.

The new business we' re engaged in - in the Caribbean, Central and South America - is a direct-to -home satellite television distribution business called Galaxy Latin America based upon the DIRECTV technology implemented by Hughes in the United States last year. I'm talking about a truly multinational enterprise which integrates the entire hemisphere in one media business .

2) Building bridges to each of the Governments.

In our business- -telecommunications and media--1 can think of no area which has more strategic importance. We have found that Governments worry about 4 things when a new business arrives:

I can tell you that when Hughes and GM Management and the GM Board approved this multi-hundred million dollar investment earlier this year, there was no place on the globe where we

1) How does this new business impact our laws?

2) What does it do for our people?

138

3) Will it engage in fair competition? and 4) How does it impact existing businesses?

With regard to education, we are currently working with universities in the United States and South America to develop elementary , secondary and college level educational channels. Our vision of the Americas includes an environment where our children and even adults have the tools available to constantly grow and improve themselves.

These are legitimate questions . They must be properly dealt with.

We are dedicating a significant share of our management attention in this area.

Moreover, an important aspect of this issue is the support of the U.S. Government in building these bridges. We have clearly rece ived that support through the actions of Secretary Brown and the positive actions of the U.S. Federal Communications Commission in offering to open the U.S. markets in the spirit of reciprocity .

And, oh, imagine being able to watch outstanding soccer games from every country in South America and even Europe .

Now what are the risks?

1) Well-intentioned Government officials will attempt to over regulate the technology and the content. I suggest our citizens can make choices faster and better .

3) Offering a Quality Product of Service that is reasonably and fairly priced.

The service we offer will provide laser disk quality video and CD quality stereo sound . The service will offer 70+ channels of movies, sports, novellas cable and cultural programming , news and education in Spanish, Portuguese and English.

Now, I know some of you will say , why do I need 70+ channels? The easy answer is you don't. But you like sports, and you like movies, and you like news channels and I want educational programming for our children--that's where seventy channels comes from--choice.

2) Our competitors will attempt to raise barriers .

I suggest free competition produces better services at lower prices.

And finally, 3) Economies within the region may make such businesses subject to substantial financial risk .

I would suggest that ups and downs in the economies of one country or another should be predicted. Our business dealings should anticipate an occasiona:l rough road.

Letme talk about two types of services only: news and education. Imagine a customer in Argentina being able to watch the local news from the United States, Mexico, Columbia, Venezuela and Brazil.

I can think of no way to better assure integration in societiesand toward free trade than for our people to hear and understand first hand those things which effect us in our daily lives.

In this respect , it will pay to have the highest quality service, the best partners, and deep pockets .

Thank you very much.

139

ConcludingRemarks Hon. Ronald H. Brown, U.S. Secretaryof Commerce July 2, 1995

Remarks by The Honorable Ronald H B Secretary ofc ¡ rown o ommerce, United States of America July 2, 1995 [as prepared for delivery]

Goodafternoon. Rather than offer the soaring statementof farewell and charge to carry on the Miami Process of hemispheric integration as an occasionlike this would seem to require -- I' d like insteadjust to offer heartfelt thanks and gratitude foryourparticipationand everything we have been ableto accomplish over the last four days.

Whathas happened here has been extraordinary.

Overa thousand people -- far more than we had hopedor expected -- have come together to push forwardthe process of hemispheric commercial integration , to accelerate the arrival of the benefits freetradeand growing economies will bring to the almost800millionpeople of this hemisphere. The interestin this event has been overwhelming.

also brought a clearer perception of the private sector's role in bringing it about. You have been leading the process of hemispheric commercial integration for many years. With this conference we are harnessingyour knowledge and experience in the service of free trade throughout the hemisphere.

Again, my thanks for coming to Denver. Cohosting this event has truly been one of the highlights of my service as Secretary of Commerce. I believethe processes we have set in motionthis weekwill have profound and beneficial effects for many years to come.

There have been a number of highlights over the last four days.

Whatmadethis Hemispheric Trade and Commerce Forum truly historic, however, was the unprecedentedparticipation of the private sector.

Yourinterest, your input, your collaboration have become the key to a rapid and efficient hemisphericintegration process.

Our hosts -- Colorado and Governor Romer, Denver and Mayor Webb -- have shown that this truly is an internationalcity . . . both charming and businesslike. . . the crossroads of the Americas . . . poised to reap tremendous benefits in an integratedhemisphere.

Traditionally governments have acted -- both unilaterallyand in concert with one another -- to shape the international trading system without consulting the people who best understand internationaltrade. And in the past few years, governments have done pretty well. Trade barriershave fallen throughoutthe Americas. Last December'sMiami Summit was as much a product of the new commercial environment as of democracy's emergence. The Miami Summit's mostdramatic breakthrough was a declaration of supportfor a Free Trade Area of the Americas.

BusinessDevelopmentCouncil meetings between the U.S. and Brazil and the U.S . and Argentina broughtthe public and the private sectors together to achievetangiblebilateralprogress -- steps on the road to integration.

The Trade Ministerial, and the bilateral meetings I held revealed a depth of commitment to freer trade that was truly heartening. A year ago this hemispherewas splintered among regional trading blocks and bilateral arrangements. While the realityof many separatearrangementsremains, the ideaof a unified and coherent hemispheric trading system has taken root. The question of a Free Trade Area of the Americas is not "if" but "when."

But governments acting alone simply are not as effe ctive in promoting free trade as governments acting in partnership with the private sector• Our newunderstandingof the benefits of free trade has 143

We break down barrier s when political and economic democracy create unprecedented opporttmit ies for workers to achieve security and find opporrunityfor themselves and their children.

Of course, until the ideal of free trade grows into formal arrangemenrs,the private sector is creating the bonds that hold us together. And the time spent yesterday in the Plenary session and the workshops I attended- time spent working with private businesspeople face-to-face - was perhaps the most important time I spent in Denver .

And we break down barriers when governments reach out to the men and women of the private sector to cooperate in building a new economic world and together pursue the goal of a more integrated and prosperous society .

Work.ingtogether, we are fashioning an era as one in which barriers fall and people come together to overcome challenges and create opportunity with an unprecedented strength and determination.

Over these four days in Denver , we have made historic strides toward an integrated hemisphere and begun to build a historic bridge between the public and the private sectors that will carry us into the 21st Century.

We break down barriers when thirty four nations come together to find common ground for commercial relations that make us stronger and more prosperous.

I look forward to further work with all of you to make real our dream of a Free Trade Area of the Americas .

144

Appendices Summit of the Americas TradeMinisterial,Final Joint Declaration WesternHemisphereTradeand CommerceForum Agenda NationalForums

SUMMITOF THE AMERICAS TRADEMINISTERIAL Denver, Colorado June 30, 1995

FINAL JOINT DECLARATION

INTRODUCTION 1.

We, the Ministers responsible for trade representing the 34 nations which participated in the Summit 1 of the Americas (SOA), met in Denver for the first Trade Ministerial meeting mandated by our Heads of State and Government. We agreed to begin immediately a work program to prepare for the initiation of negotiations of the Free Trade Area of the Americas (FT AA) in which barriers to trade and investment will be progressively eliminated. Negotiations will be concluded no later than 2005.

2.

We examined approaches for constructing the FTAA which will build on existing subregional and bilateral arrangements in order to broaden and deepen hemispheric economic integration and to bring the agreements together. We will strive to maximize market openness through high levels of discipline as we build uponexisting agreements in the Hemisphere. We agreed to ensure that the FT AA will: be fully consistent with the provisions of the Agreement Establishing the World Trade Organization (WTO Agreement); be balanced and comprehensive in scope, covering among others, all areas included in the SOA Plan of Action; not raise barriers to other countries; and represent a single undertaking comprising mutual rights and obligations.

3.

In view of the wide differences in levels of development and size of economies, we will actively look for ways to provide opportunities to facilitate the integration of the smaller economies and increase their level of development.

4.

We recognized the importance to our nations of achieving macroeconomic stability and the efforts being made by countries in our Hemisphere to achieve such stability.

INITIALWORK PROGRAM 5.

Based on decisions made at the Summit of the Americas , we decided to initiate preparation for active negotiations. In order to meet our Heads' of State and Government commitments for constructing the FT AA, we recognized the need for immediate preparatory work in the Hemisphere and therefore are establishing working groups in the following areas: Market Access; Customs Procedures and Rules of Origin; Investment; Standardsand Technical Barriers to Trade; Sanitary and Phytosanitary Measures; Subsidies, Antidumping and Countervailing Duties; and the working group on the Smaller Economies.

6.

The overall program of each working. group_ shoul~ include the identification and examination of existing trade-related measures in each area, with a view to identifying possible approaches to negotiations.

1

Antigua and Barbuda, Argentina, Bahamas , Barbados, Belize, Bolivia, Brazil, Canada, Chile, Colombia, Costa Rica, Dominica,Dominican Republic, Ecuador, El Salvador, Grenada, Guatemala Guyana,_Haiti,_Honduras, Jamaica, Mexico, Nicaragua, Panama Paraguay, Peru, St. Vincent and the Grenadines, St. Lucia, St. Kitts and Nevis, Sunname, Tnmdad and Tobago, Uruguay, eUUnited ¡ States of America, and Venezuela.

147

We are providing overall guidance, including a beginning timetable and initial coordinators, for each working group in the Annex. We will receive reports and determine at the March 1996 Trade Ministerial meeting the next steps to be taken in each area, including an appropriate timetable for further work .

7.

At the March 1996Trade Ministerial, we will establish working groups and their terms of reference in the following areas: Government Procurement; Intellectual Property Rights; Services; and Competition Policy.

8.

All Working Groups will be open to the participation of all nations. We direct our Vice Ministers to meet, as needed, before the March 1996 Trade Ministerial to coordinate the work and to review progress of the working groups, and ask that the host of the March 1996 Trade Ministerial chair such meetings . We ask the tripartite committee - the OAS, the IDB and ECLAC 2 -- to provide analytical support, technical assistance, and relevant srudies within their respective areas of competence, as may be requested by the working groups .

REPORTS ON WORK UNDERWAY 9.

We received reports on the status of work undertaken in the various trade and investment fora and noted the entry into force of the MERCOSUR Customs Union on January 1, 1995; the entry into force of the common external tariff among the Andean Group countries on February 1, 1995; the entry into force of free trade agreements between Mexico and Costa Rica on January 1, 1995, Mexico and Bolivia on January 1, 1995, Chile and Ecuador on January 1, 1995, and the Group of Three (Mexico, Colombia, and Venezuela) on January 1, 1995; the scheduled accession of Suriname to the Caribbean Community on July 4, 1995; and the discussions within other subregional groups on strengthening and broadening economic integration in the Hemisphere.

10.

The Special Committee on Trade (SCT) of the OAS submitted an initial report on its activities . We commended the SCT, which last convened in Montevideo on June 14-15, 1995, for completing the first stage of a compendium and a comparative analysis of integration agreements in the Hemisphere, and the preliminary study on tariffs and rules of origin. We look forward to receiving the full report of the SCT at the March 1996 Trade Ministerial. We stressed the importance of the SCT's analyses in the preparatory phase of constructing the FTAA and of work by the tripartite committee -- the OAS, IDB, and ECLAC -- in providing information for our subsequent decisions on future work for our governments.

OTHER MATTERS 11.

We are committed to transparency in the FT AA process. As economic integration in the Hemisphere proceeds, we welcome the contr1but1onof the private sector and appropriate processes to address the protection of the environment and the further observance and promotion of worker rights, through our respective governments.

EJJIJJRE MINISTERIALMEETINGS 12.

We accepted the invitation of the Government of Colombia to host the next Trade Ministerial to be held in March 1996. On that occasion, we will establish the date and venue of the third Trade Ministerial.

2Representatives of the Organization of American States , the Inter -American Dcvelopme • · · Am enca · an d th e C an Economic· Comm1ss1on 1or La tm an (ECLAC) were invited as observers .

148

(IDB) '

I

Annex

PLAN OF WORK

WORKINGGROUPS JPS

We instruct each working group below to complete a report for presentation to the March 1996 Trade Ministerial, including recommendations for subsequent action.

(1)

The Working Group on Market Access will: construct and organize in the most efficient manner possible a comprehensive data base on market access barriers (tariffs and nontariff measures as required for the WTO Integrated Data Base) in the Hemisphere covering all industrial and agricultural products, using the format of the WTO Integrated Data Base; make specific recommendations for conducting market access negotiations.

(2)

The Working Group on Customs Procedures and Rules of Origin will: compile in the most efficient manner possible a comprehensive inventory of Hemisphere customs procedures and determine the feasibility of publishing a Hemisphere Guide to Customs Procedures; develop features that are fundamental to an efficient and transparent system of rules of origin, including nomenclature and certificates of origin; identify areas for technical cooperation in customs operation, such as connections among computerized systems and the prevention of fraud; recommend a specific approach for Hemisphere-wide simplification of customs procedures; make specific recommendations for conducting negotiations on rules of origin.

In view of the different expertise required to work on Customs Procedures on the one hand, and Rules of Origin on the other, the members of this Working Group should consider the most efficient way to ensure participation of the appropriate experts.

(3)

The Working Group on Investment will: create an inventory of investment agreements and treaties , and the protection therein, that exist in the region; compile in the most efficient manner possible and inventory of investment regimes in the region and, on the basis of this information, determine areas of commonahty and divergence and make specific recommendations.

(4)

The Working Group on Standards and Technical Barriers to Trade will: recommend specific ways to enhance transparency, especially in standards development; 149

compile information on the bodies that exist which are charged with conformity assessment to technical regulations in the Hemisphere, and those organizations that accredit such bodies; recommend methods to promote understanding of the WTO Agreement on Standards and Technical Barriers to Trade, including through technical assistance; make recommendations on product testing and certification, with a view to mutual recognition agreements.

(5)

The Working Group on Sanitaryand Phytosanitary(SPS) Measures will: create an inventory of all agreements on SPS in the Hemisphere and compile in the most efficient manner possible an inventory of SPS regimes in the region; recommend specific ways to enhance transparency and information-sharing understanding of laws and regulations that affect trade flows in the region ;

and improve

identify practices that may need improvement, and make recommendations for their improvement ; promote understanding of the WTO Agreement on Sanitary and Phytosanitary Measures , including through technical assistance, and recommend measures for the effective implementation of this Agreement; enhance mutual understanding of the scientific basis for SPS certification procedures, with a view to recommend ways to promote recognition of certificates among countries of the Hemisphere; compile by the most efficient means possible the methods used for risk assessment in the Hemisphere , with a view to work toward common approaches.

(6)

The Working Group on Subsidies, Antidumpingand CountervailingDuties will: identify agricultural export subsidies and other export practices with similar effects on Hem ispheric trade; recommend ways to address all trade-distorting export practices for agricultural products that are traded in or with the Hemisphere; promote understanding of WTO obligations in the area of subsidies, and begin to compile an inventory of subsidies practices in the Hemi sphere; review information on the dumping and subsidies laws of countries in the Hemisphere; exchange view s on the application and operation of trade remedy laws regarding subsidies and dumping and develop recommendations for further work .

150

(7)

The Working Group on Smaller Economies will: identify and assess the factors affecting the participation of smaller economies in the FT AA and the expansion of trade and investmem stimulated therefrom; idemify and examine ways to facilitatethe adjustmem of the smaller economies to the FT AA process , including the promotion and expansion of their trade , and provide recommendations on measures to be taken and issues to be taken into account in the negotiations of the FT AA ; request the IDB, ECLAC, the OAS and other relevant institutions to provide pertinent information on their activities to facilitate integration of the smaller economies in the Hemisphere .

INITIALWORKING W GROUP COORDINATORS We have agreed that the first meeting of each Working Group will be arranged by the following coordinators, which will inform all countries in the Hemisphere of the proposed initial meeting:

Market Access: El Salvador Customs Procedures and Rules of Origin: Bolivia Investment: Costa Rica Standards and Technical Barriers to Trade: Canada Sanitary and Phytosanitary Measures: Mexico Subsidies, Antidumping and Countervailing Duties: Argentina Smaller Economies: Jamaica

151

WESTERN HEMISPHERE TRADE AND COMMERCE FORUM Denver, Colorado July 1 - 2, 1995

AGENDA Overview Toe Western Hemisphere Trade and Commerce Forum will be a series of interactive sessions between private sector and government representatives from throughout the hemisphere focusing on the core aspects of commercial integration in the wakeof the Summit of the Americas' mandate to create a "Free Trade Area of the Americas" by 2005.

The program is designed to foster dialogue between the private and public sectors regarding areas the private sector

believescould facilitate progress toward a hemisphere-wide free trade area. Forum sessions will be led by government officialsand private sector representatives. Forum discussions will result in recommendations from the private sector that will eventually be presented to governments for their review after the Forum.

Friday June3Q J 995

8:00a.m.8:00 p.m.

Forwn Registration and Credentialing Location : Colorado Convention Center For those arriving earlier, registration will also be available from 12:00 p.m . - 8 :00 p.m . on Thursday.

A photo ID is necessary to attend all Forum activities.

SHUTTLE BUSES WILL TRANSPORT THE DELEGATIONS TO INTERLOCKEN - TIME AND DETAILS TO BE DETERMINED

8:00P.M.

LoCATION : lNTERLOCKEN BUSINESS PARK

OPENING RECEPTION AND DINNER

(HOST COMMITTEE)

Saturday, July 1, 1995

Throughout the day on Saturday in Lobby B of the Convention Center, there will be technology demonstrations that illustratethe themes of the Forum. Live demonstrations will be held from 5:00 to 5:30 p .m.

8:00 a.m.

Continental Breakfast

8:30-

Opening Addresses

9:30 a.m.

Location : Colorado Convention Center Ballroom Foyer

"The Spirit of Miami: Building the Bridge~ of CommerrcialIntegration Themes : The role of the private sector m economic mtegrat1on and the importance of infrastructure to that process. Commission the Forum to produce _private sector recommendations on means for streamlining daily business transacuons as a contnbuuon toward hemispheric commercial integration.

Welcoming Remarks Governor of Colorado Roy Romer Introductory Addresses Hon . Ronald H . Brown, U.S . Secretary of Commerce .- Co -Host Repre sentat ive - Co-Host H on. Mickey Kantor, United States Trade fT .

Hon. Federico PeĂąa, U .S . Secretary o ransportauon Program Overview Hon. David Rothkopf, U.S . Deputy Under Secretary of Commerce

153

9:30 a.m. 12:00 p.m.

Sectoral Workshops Location: Colorado Convention Center Meeting Rooms Panelists will include chief executives of the hemisphere's leading companies in their respective fields, government officials and experts. Discussions will focus on commercial integration issues from a sectoral perspective, trade andinvestment barriers, related regulatory issues, and major projects in the region. On the second day (Sunday morning) sectoral workshops will prepare and approve private sector recommendations which will be presented at the closing plenary session.

I. "Building the Foundation of a Hemispheric Information Infrastructure" Focus on the growing hemispheric telecommunications and information technologies market, and on advancing hemispheric economic integration through the creation of a hemispheric information infrastructure by implementing needed policy and regulatory measures.

Chair:

Hon. Ronald H. Brown, U.S. Secretary of Commerce

Panel 1: "New Technologies: Shaping the Information Infrastructure for Hemispheric Economic Integration" Moderator:

Ernst Burri, Chairman and CEO, CompaĂąia Dominicana de Telefonos (CODETEL), Dominican Republic

Panelists:

Fernando Borio, Secretary General, TELEFONICA de Argentina, Argentina Maria del Rosario Medero Ranzini, President, ANTEL, Uruguay Maria Cristina de Mejia, President, Celumovil de Colombia S.A., Colombia David Porter, Vice President, Technology and Infrastructure, AT&T, USA Joost Van Damme, Vice President, TELEBRAS, Brazil

Panel 2: "Telecommunications Policy and Regulatory Steps to Achieve Economic Integration in the Americas" Moderator:

Panelists:

Hon. Larry Irving, Assistant Secretary for Communications and Information, U.S. Department of Commerce, USA Jaime Chico Pardo, Director General, TELMEX, Mexico Claudio Garcia, Senior Corporate Vice President and Chief Financial Officer, Compania de Telefonos de Chile, S.A. (CTC), Chile Jorge Kunigami, President, Organismo Supervisor de Inversion Privada en Telecomunicaciones (OSIPTEL), Peru Rolando Rivas, Director General, TELCOR, Nicaragua Jose Soriano, Director General, CONATEL, Venezuela

II. "Meeting the Energy Needs of the Americas" Panelists will discuss the business opportunities in the energy sector in _the Americas especially the importance of access to energy as a fundamental aspect of integration and the opportunities for regional cooperation The d1scuss1onwill focus on vanous factors which will affect the energy market: privatization, financing, and environmental concerns.

Panel 1: "HemisphericEnergy Integrationand Cooperation" Moderator:

Hon. William White, Deputy Secretary of Energy, U.S. Department of Energy

Panelists:

James Bannantine, Principal, Enron Development Corp., USA Raul A. Aguero, Deputy Secretary for Fuel, Ministry of Energy, Argentina Thomas G. Boren, President and CEO, Southern Electric International, USA Stephen Chesebro', President and CEO, Tenneco Gas, USA Edgar Romero Nava, President, FEDECAMARAS, Venezuela

154

panel 2: "Challenges to Energy Integration" Moderator:

Amb. Paul Boeker, President, Institute of the Americas, USA

panelists:

Raul Garcia, President, Ente Nacional Regulador del Gas, Argentina H.E. Peter Greiner, Executive Secretary for Energy, Ministry of Mines and Energy, Brazil Douglas Jones, Director, National Regulatory Research Institute, USA Patricio Perkins, Board of Directors, Yacimientos Petroliferas Fiscales (YPF) and Country Director, Oppenheimer Argentina, Argentina Antonio Vives, Division Chief, Infrastructure and Financial Markets, Inter-American Development Bank

m. "Transportation: Moving the Hemisphere Together'' Panelists will discuss how transportation services can be improved in the hemisphere. The discussion will emphasize developing multilateral policy approaches to transportation problems, eliminating barriers to free and open competition, reducing the regulation of international transportation, integrating transportation services firms across borders, and investing in and building transportation infrastructure.

Panel 1: "Transponation Services Bringing the Hemisphere Together" Moderator:

Hon. Federico Peiia, U.S. Secretary of Transportation

Panelists:

Guillermo Berriochoa, President, Transportes Inter-MEX, Mexico Edward Driscoll, President, National Air Carrier Association, USA Edward Emmett, President, National Industrial Transportation League, USA Carlos Viveros, CEO, Tecomar S.A., Mexico

Panel.2: "Building the Transponation Infrastructure for the Hemisphere" Moderator:

Humberto Seijas, Chairman, Latin American Delegation American Association of Port Authorities, Venezuela

Panelists:

Jaak Rannik, President and CEO, B & R Group, Dominican Republic Derish Wolff, President and CEO, Louis Berger International, USA Jorge Gonzalez, President, Airways Engineering Corporation/AAROTEC, USA Carlos Roberto Silvestrin, Director Executivo, ADTP/Agencia de Desenvolvimento Tiete Parana, Brazil Paulo Augusto Vivacqua, Director-Presidente, Consorcio Operacional do Corredor Centroleste, Brazil

IV. "Agribusiness in the Free Trade Area of the Americas" Panelists , drawn from a cross section of industry and governmentfrom throughout the hemisphere, will discuss the benefits from greater hemispheric integration and the policy and regulatory challenges that must be overcome.

Panel 1: "Market Opportunities and Challenges"

u .S

Moderator:

Hon. James Schroeder, Di:puty Under Secretary for Farm and Foreign Agricultural Services, Department of Agriculture, USA

Panelists:

Salvador Carb6 Board of Directors, Bunge and Born, Argentina Luis Fernando Furlan, Chairman of the Board, Sadia Concordia S.A. lndustra e Comercio, Brazil Phil Seng President and CEO, U.S. Meat Export Federation , USA John Wer~er, President and CEO, Heinz Venezuela and Area Director for Latin America, Venezuela

155

Panel 2: "Regulatoryand Policy Issues" Moderator:

Carlos Aquino Gonzalez, Director General, Inter-American Institute for Cooperation on Agriculture

Panelists:

G. Allen Andreas, Counsel to the Executive Committee, Archer Daniels Midland Company, USA Ronald Bown, President, Asociacion de Exportadores de Chile, Chile Marcelo Avogadro, Under Secretary for International Trade Relations, Ministry of Foreign Affairs, Argentina H.E. Pablo Pereira, Minister of Economy and Development, Nicaragua

V. "Tourism: Expanding CommercialHorizons" Participants will identify and discuss possible impediments to expanding travel and tourism related business trade and investment, and the opportunities in this sector for Hemispheric commercial integration.

Panel I: "ExaminingCommercialIntegrationof TourismServices" Moderator:

Carlos Asensio, President, Aerorepresentaciones Consultores lnternacionales, Argentina

Panelists :

H.E. Lilliana Canale Novella, Minister of Industry, Tourism, Integration, and International Trade Negotiations, Peru Michael Halle, Executive Producer of Tourism Technology, Virtual Warehouse, Canada Alfonso Mujica, President, National Chamber of Commerce of Chile, Chile

Panel 2: "Opportunitiesfor Investmentand Promotionof Tourism-relatedBusiness" Moderator:

Caio Luiz de Carvalho, President, Brazilian Tourist Agency, Brazil

Panelists:

Luis Dodero, Vice President and General Counsel, MIGA, The World Bank Adnan Hassan, Global Manager, Investment Promotion Agency Network, MIGA, The World Bank H .E. Francisco Alberto Mayorga, Secretary of Tourism, Argentina Merrett Stierbeim, President and CEO, Greater Miami Convention and Visitors Bureau, USA

VI. "Improvingthe Hemisphere'sHealth through Open Markets" Panelists will assess the changing healthcare systems and discuss the strategic alliances among governments, universities, and hospitals within the region . The discussion will also focus on ways to liberalize barriers to trade and create market opportunities for health technologies and services .

Panel I: "Integratingthe HealthcareInfrastructure" Moderator:

Pablo Valencia, Director, Office of Technology and Transfer, University of Southern California, USA

Panelists :

David Brandling-Bennett, Deputy Director, Pan American Health Organization Arnb. Sonia Picado , Ambassador to the United States from Costa Rica Ian Rawson, Senior Vice President, Allegheny General Hospital, USA Jorge Solorzano Mosqueda, Director General, Hospital Santa Fe, S.A . de C.V ., Mexico

156

Panel 2: "Breaking the Barriers to Trade and Creating Market Opportunities in a Hemisphere-wide Free Trade Area" Moderator: panelists:

Mario Rafael Caviedes, Executive President, Chilean Association of Private Health Delivery, Chile Harvey Bale, Sr. Vice President, Pharmaceutical Research and Manufacturers Association, USA David Brandling-Bennett, Deputy Director, Pan American Health Organization Carlos Gracia, Director of Health Programs, Ministry of Health, Mexico Ronaldo Pitta, Treasury Secretary, Associacao Brasileira da Industrias e Art . e Euip. Med. Odont. (ABMO), Brazil Grey Warner, Senior Vice President, Merck Latin American Region, USA

VII. "Environmentand the Economics of Integration" Free trade and increased economic integration are key factors for sustainable development. At the Summit of the Americas, a commitment was made to make environmental and trade policies mutually supportive throughout the process of economic integration . Heads of state at the Summit further committed to emphasize pollution prevention and the promotion of public participation. This workshop seeks views on how to implement these commitments.

Panel 1: "Environmental Regulation and Trade Integration" Moderator:

Victor Lichtinger, Executive Director of the North American Commission for Environmental Cooperation, Mexico

Panelists:

Jorge Cabrera , Secretary, Central American Environmental Commission , Guatemala Raul Deju, President, Chemical Waste Management, Western Region, USA William Futrell, President, Environmental Law Institute, USA Pedro Tarak, Director, Fundacion Ambiente y Recursos Naturales (FARN), Argentina

Panel 2: "Cooperative Approaches to Cost-Effective Environmental Protection" Moderator:

Ralph Peterson , CEO, CH2M Hill International Ltd., USA

Panelists:

P .J . (Jim) Adam, CEO, Black and Veatch, USA Joel Charm, Chairman , Technical Advisory Subgroup for ISO 14000, USA Gary Gallon, President, Canadian Environment Industry Association Canada Manuel Olivera, Manager of Environmental Affairs, Asoc1ac1onNac1onal de lndustriales , Colombia

12:00 p.m. 12:30 p.m.

Location : Colorado Convention Center Ballroom

Special Remarks

"The Miami Process: The Spirit of Cooperation" Themes: Results of the Summit of the Americas and activities to implement the Declaration and Action Plan that were agreed to by Leaders . Hemisph_eric commercial liberalization as an important facet for advancing the Summit of Americas' Declarauon of Prmc1ples.

Introductions Gail Schoettler, Lt. Governor of Colorado Buddy Mackay, Lt. Governor of Florida Address .

Hon . Thomas F . McLarty, III, Couns elor to the President

(Luncheon will be served between remarks by Counsellor MclArty and the following panel .)

157

12:30 1:15 p.m.

Luncheon

Location: Colorado Convention Center Ballroom

1:15 2:30 p.m.

Plenary Session

Location: Colorado Convention Center Ballroom

"Toward a Hemispheric Capital Markel" Themes: The relevance of enhanced capital flows to commercial integration and the steps governments and the private sector can take to encourage it. Without modem and efficient capital markets, countries and businesses will not have access to the resources necessary for steady growth . The Summit of the Americas' plan of action includes a provision regarding capital markets development and liberalization which may be addressed.

Moderator:

William Rhodes, Vice Chairman, Citibank, USA

Panelists:

H .E. Domingo Cavallo, Minister of Economy, Argentina Enrique Iglesias, President, Inter-American Development Bank H.E. Marie Michele Rey, Minister of Finance and Economy, Haiti

2:30 p.m. S:00 p.m.

Functional Workshops

Location: Colorado Convention Center Meeting Rooms Panelists will focus on commercial integration issues from a functional, cross-cutting perspective : regulatory, standards and legal issues that affect all sectors and which can facilitate or impede integration .

I. "Hemispheric Commerce: Setting the Standards of Integration" Transparent and accessible systems for standards and conformity assessment are critical for market access in the hemisphere. The Panel will explore prospects and means to harmonize standards, technical regulations, and conformity assessment systems in the Americas .

Panel 1: "Standards" Moderator:

Richard LaFontaine, President, Standards Council of Canada, Canada

Panelists:

Andrea Jensen, Senior Director for Standards, NSF International, USA Pablo Benia, Director, lnstituto Uruguayo de Normas Tecnicas, Uruguay H .E. Jose Vicente Maldonado, Minister of Industries and Commerce, Integration and Fishing Ecuador Sergio Mazza, President, American National Standards Institute, USA •

Panel 2 ¡ "ConformityAssessment" Moderator:

Hon. Mary L. Good, Under Secretary for Technology , U .S. Department of Commerce

Panelists :

Thomas Castino, President, Underwriters Laboratories, Inc., USA John Kean, President , Canadian Standards Association, Canada Silvia Portnoy, President, National Institute of Industrial Technology, Argentina Augusto Pozo Pino, Director , Centro de Calidad, Mexico Julio Cesar Carmo Bueno, President, Metrology Institute, Ministry of Industry Commerce and Tourism, Brazil '

158

II.

Enhancing Integration through Legal Systems" Modern legal systems and effective means for settling cialelis?J1CS att essential to an integrated commercial system and the facilitation of trade and investment in the

Hemisphere

panels will lookal ways to address diff erenccs will in legal systems in order

.;i~ poceDlialfoT corruption

to

promote commercial i01egration

in the regjon.

Panel 1: Integrating Commercial Law Systems

Moderator Hoo. Ginger Lew, General Counsel, U.S. Department of Commerce

Panelists: JoseAlexander Tavares Guerreiro, Professor of Commercial

Law University of Sao Paulo Law School, Brazil Boris Kozolchyk. Director, NationalLaw Center for Inter-American Free Trade, USA Alejandro Ogarrio. Mexican representativeto UNICTRALPartner at Buffete Ogarrio y Dias, Mexico Stephen T. Zamora.Director International Law Institute University of Houston Law Center, USA

Modetal«:

Hon. Ginger Lew, General Counsel, U.S. Departmem of Commerce

Panelists

RobertoDañino Partner. Rogers and Wells USA JamesM. Lyons, Partner, Rochberger, Appel, Powers & Johnson. USA Heman Perez, Atomey, Empresa .Electricadel Ecuador, Ecuador Edgard Romero • Nava, President, FEDECAMARAS Venezuela

m. Small and Medium-sized Businesses in a Hemispheric Marketplace• of

smalland

medium sized enterprises

Panelists will discuss the importance

(SMEs) to the process of job creation and hemispheric integration Discussion examine impediments to conducting 1:miJ:as for SMEs and will identify potential solutions that could be implementes through the Free Trade Area of the .Americas.

Panel 1: "Generating Growth in the Small and Medium-Siad Business Sector Competitiveness

Moderator:Luis de Ja Calle.

Panelists:

Director ,

Cultivating Job Creation and

NAFTAOffice, Embassy of Mexico

Leonardo Pizani, Executive Director , Foundation for Sustainable Development Venezuela Hon . Cassandra Pulley, Deputy Administrator Small Business Administration Jose Camillo dos Santos Representative Small Business Association of Brazil, Brazil David C . Lizarraga Preside:lt & CEO, Telacu USA Hon. Kenneth Valley, Minister of Trade Trinidad and Tobago

P2n:li: Hemispheric Integration

Removing Export lmpediments for Small and Medium-Sized Businns •

Moderator:

Thomas E. Ritter, Pre!idem, Inter ContinentalBusiness Associalcs, USA

Panelists:

Joyce Higgins de Ginnata Presidenl, Chamber of Small Industries Ecuador Michael Clark. President. AtlanticPacific Technologies. USA Martin Duggan. Executive Director, Small Business Association USA Hon. Lauri Fitz Pegado Assistant Secretary and Director General of the U.S. Commercial Service, U.S. Departmeot of Comniace, USA Norman Garcia, President fOW)(iarion for Investment and Export Development Honduras

159

E

IV. "Toward a Hemispheric Information ftfarketplace" Toe Summit of the Americas affirmed that a country's information infrastructure is essential to political, economic, social and cuJrural development. This panel will discuss issues critical to companiesthat will provide !he enlertainment, educational. and information produces that help integrate the Hemisphere and that will be pan of the Hemispheric marketplace. Discussion will focus on how procecting intellectual property and assuring open access to information networks will contribute to creating a Hemispheric marketplace .

Moderator :

Hon . Bruce Lehman, Assistanc Secretary of Commerce and Commissioner of Patents and Trademarks

Panel t : •Protection of IntellectualPropertyin the informarionMarket place• Co-Chairs :

Hon. Ronald H. Brown, U .S . Secretary of Commerce, USA Antonio Mille, President, Instituto Latino de Alta Technologia Informatica y Der echo, Ar gentina

Panelists:

Jose Antonio Rios, President and CEO, Galaxy Latin America, USA Carmen Quintanilla, Director General, Derecbo de Aucor, Mexico Al Teller, Chairman, MCA Music Entertainment Group , MCA INC, USA Kenneth Wasch, Executive Director, Software Publishers Assn . , USA Jose Maria Fernandez Unsain, President, General Society of Mexican Writers , Mexico

Panel 2: "Open Access to the InformalionMarkerplace #

Co-Chair:

Jack Valenti, President , Motion Picture Assn . of America, USA

Panelists:

Jason A . Berman, Chairman and CEO , Recording Industry Assn . of America. USA Gustavo Cisneros, Presidenc and CEO, Cisneros Group of Companies, USA Alberto Pecegueiro, Direccor General , Globosat , Brazil

V. "Private Sector Financing: lnfrastrocture and Privatization" Recognizing that physical infrastructure development is critical to greater commercial integration, panelists will focus on ways to finance Hemi spher ic infrastructure projects, and the privatization of state-owned infrastructure enterprises . A two-part discussion will emphasize the need for private financing as a vehicle for relieving governments• burden for infrastructure fundi ng and the role of governments in accelerating the shift from public to private sponsorship and risk bearing .

Panel 1: "The Role of Governmentsin AttractingPrivate Capitalto Infrastructure Financing" Moderator :

Rita Rodriguez , Director, Export -Import Bank of the United States

Panelists :

H .E . Marie Michelle Rey, Minister of Finance and Economy, Haiti H .E. Ubaldo Scavone , Minister of Industry and Commerce , Uruguay Alfredo Volio, Board of Directors, Banco Nacional de Costa Rica, Costa Rica Carlos Sanchez, Secretary for Trade and Investment, Ministry of Economy , Argentina

Panel 2: "The Role of Private Financingin lnfrastrucrureProjects # Moderator :

Enrique Iglesias, President , Inter-American Development Banlc

Panelists :

Roger Dorf, President, AT&T Network Systems , USA Ashoka Mody , Principal Financial Economist , Toe World Bank Darin P . Narayana, Executive Vice President, Norwest Bank International, USA Armando Castelar, . Director, National Bank for Social and Economic Development, Brazil

160

VI. PreparingOur ourWorkforce for the Age of Comme~cialIntegration and Hemispheric Free Trade " Focus workplace issues such as labor-management cooperation, worker skills, and labor standards to develop a more Poductive workforce and ensure that the benefits of economic integration are widely disseminated.

Moderator:

Hon. Joaquin Otero, Deputy Under Secretary for International Labor Affairs, U .S . Department of Labor

Panel 1:"Skills Demanded by the Economy of the Future " panelists:

Luis Anderson, General Secretary, Inter-American Regiona l Organization of Workers/lnternational Confederation of Free Trade Unions (ORIT/CFTIJ) H.E. Jorge Arrate Mac Niven, Minister of Labor and Social Welfare, Chile Jorge Eduardo Manoso, Professor, Centro de Estudios Sindicais e de Economia do Trabalho/Universitara de Campinas (CESET)/(UNICAMP), Brazil Jose Antonio Guzman, President, Confederaci6n de Producci6n y del Comercio, Chile

Parel2: "Roleof Workplace Practices in Ensuring that the Benefits of Economic Integration are Widely Disseminated" Panelists:

William Doherty, Director, American Institute for Free Labor Development, USA Hon . Edmundo Gonzales, Deputy Assistant Secretary for the American Workplace, U .S. Department of Labor, USA Beatrice Rangel Mantilla, Vice President, Corporate Strategie s, Cisneros Group of Companies, Venezuela John Scully, Colorado Vice President, US West Communications, USA

6:30 P.M.

SHUTILE BUSES DEPART ALL HOTELS FOR RECEPTION

7:00P.M.

RECEPTION

(HOST COMMITTEE)

LocATION:

DENVER MUSEUM OF ART

Sunday, July 2, 1995

8:00 a.m.

Breakfast

Location: Colorado Convention Center Ballroom

8:30 9:30 a.m.

Plenary Session

Location: Colorado Convention Center Ballroom

"The Evolution of Integration: Bringing Regional Agreements Together" Themes : The deepening and widening of various trade arrangements in the hemisphere and achieving the FT AA by 2005.

Moderator:

H.E. Alvaro Garcia, Minister of Economy, Chile

Panelists:

H.E. Cesar Gaviria , Secretary General , Organization of American States H.E. Dorothea Werneck, Minister of Industry, Commerce and Tourism, Brazil Carlos Sanchez, Secretary for Trade and Investment, Ministry of Economy, Argentina

9:30 a.m. _ 10:45 a.m.

Sectoral Workshops Location : Colorado Convention Center Meeting Rooms Sectoral workshops meet again to review reports from pnor day s sessions and prepare private sector recommendations to be forwarded to the trade ministers for their review .

10:45a.m. _ 11:30 a.m.

Moderator:

Location : Colorado Convention Center Ballroom

Presentation of Conclusions

Secretary of Commerce .

H on. D av1'd R o op , us Deputy Under Sectoral Panel Moderators/Representatives

161

11:30 12!30 p.m .

Location : Colorado Convention Center Ballroom "Toward a Free Trade Area of the Americas" Themes: Speakers will discuss perspectives on the future of the hemisphere and integration and how the private sector can assist in the process from Denver to the creation of the Free Trade Area.

Clos.ing Plenary

Chair :

Hon. Ronald H. Brown, U.S. Secretary of Commerce

Moderator :

Hon. David Rothkopf, U.S . Deputy Under Secretary of Commerce

Panelists :

Stephen Chesebro', President and CEO, Tenneco Gas. USA Manuel Feliu, President, Consejo Empresario de America Latina (CEAL). Chile Juan Gallardo, Coordinator. Coordinadora de Organizaciones Empresariales de Comercio Exterior (COECE). 1exico Kevin . McGrath, President and CEO. Hughes Communications, USA Concluding Remarks Hoo . Patricia Schroeder. U.S. House of Representatives Hon. Ronald H. Brown, U.S . Secretary of Commerce

162

NATIONAL FORUMS FOR FTAA-2005 Toe Hemispheric Trade and Commerce Forum brings together over 1ooocorporate and financial executives from around the hemisphere. The Forum provides an opportunity for dialogue between private sector leaders and senior government officials as well as facilitating networking among business leaders from around the Hemisphere. Because the first Forum meeting in Denver was so successful, a second Forum is scheduled to be held congruent with the trade ministerial in Colombia in March , 1996, as a major step toward making the Forum a standing institution .

In Denver several participants proposed that the success of the Hemispheric Forum be replicated throughout rhe Hemisphere at the national level. Private-sector leaders who attended the fust Hemispheric Forum could transfer the "spirit of Denver" to their home countries and form the core group around which to structure national forums consisting of a wider group of corporate and financial leaders . National forums would serve to: - Facilitate dialogue between the private and public sector on Ff AA-related negotiations and other pertinent issues; Focus national attention on the goal of attaining the Free Trade Area of the Americas by 2005 ; Stimulate exchanges among executives across economic sectors and help to create a national consensus on hemispheric trade; Better prepare national delegations to future trade ministerial and Hemispheric Trade and Commerce Forums .

Meetings of the Hemispheric Forum will provide opportunities for regular exchanges among representative from national forums, to allow for a sharing of experiences and "best practices " and to facilitate any coordination of activities that was deemed to be mutually beneficial.

163 • U.s • GOVERNMENTPRINTING OFFICE : I 9 95-3

86- 6 3 2 / G 2 60 9

*

i

*